2015 (12) TMI 1176 - AT - Income Tax

Penalty u/s. 271(1)(c) - Held that - The assessee has not furnished inaccurate particulars of income and there are no findings of the Assessing Officer and the CIT (Appeals) that the details furnished by the assessee in his return are found to be inaccurate or erroneous or false. Under these circumstances, in our view the penalty in dispute is totally unwarranted and deserve to be deleted. Accordingly, we delete the penalty made u/s. 271(1)(c) of the I.T. Act and quashed the orders of the authorities below on the issue in dispute. - Decided in favour of assessee

Summary

Issues Involved:
Appeal against penalty u/s. 271(1)(c) for inaccurate particulars of income.

Detailed Analysis:

1. Violation of Principles of Natural Justice:
The appellant filed an appeal against the penalty imposed under section 271(1)(c) for inaccurate particulars of income. The appellant contended that the order confirming the penalty was passed in violation of principles of natural justice. However, the authorities below had observed that the appellant did not file any reply during the penalty proceedings. The Assessing Officer (AO) categorized rental and hiring charges under business income, disallowed ineligible expenses, and imposed the penalty. The First Appellate Authority dismissed the appeal, citing the dismissal of the quantum appeal by ITAT. The appellant argued that the penalty confirmation was unjust due to the violation of natural justice.

2. Imposition of Penalty under Section 271(1)(c):
The AO initiated penalty proceedings under section 271(1)(c) based on the belief that the appellant furnished inaccurate particulars of income. The AO, after regrouping incomes and disallowing expenses, imposed a penalty of Rs. 5,06,100. The CIT(A) upheld this penalty, noting the dismissal of the quantum appeal by ITAT. However, the Tribunal disagreed with this approach, emphasizing that the confirmation of additions in quantum proceedings does not automatically warrant the imposition of a penalty. Citing legal precedents, the Tribunal highlighted that the mere disallowance of a claim does not amount to furnishing inaccurate particulars unless there is a deliberate act of concealment.

3. Furnishing of Inaccurate Particulars of Income:
The Tribunal analyzed the facts and legal principles to determine if the appellant indeed furnished inaccurate particulars of income. Referring to the Supreme Court's decision in CIT vs. Reliance Petroproducts Pvt. Ltd., the Tribunal emphasized that a mere disallowed claim does not constitute inaccurate particulars. The Tribunal found that there was no evidence of incorrect or false information in the appellant's return. As the details provided were not deemed inaccurate or erroneous, the Tribunal concluded that the penalty under section 271(1)(c) was unjustified. Consequently, the Tribunal deleted the penalty and overturned the decisions of the lower authorities.

4. Conclusion:
After a thorough examination of the case, the Tribunal allowed the appeal filed by the Assessee, ruling in favor of quashing the penalty imposed under section 271(1)(c). The Tribunal emphasized the distinction between quantum and penalty proceedings, highlighting that the mere disallowance of a claim in the former does not automatically lead to the imposition of a penalty. By applying legal principles and precedents, the Tribunal concluded that the penalty was unwarranted in this case, leading to the deletion of the penalty amount.