2015 (12) TMI 1506 - AT - Income Tax

Penalty u/s 271(1)(c) - addition u/s 68 - Held that - In the present case there was a change of opinion and no concealment of income or furnishing of inaccurate particulars on the part of the Assessee. Therefore, we find force in the contention of the assessor s counsel that the issue involved in the present case is squarely covered by the decision of the Hon ble High Court of Delhi in the case of CIT vs. Aggarwal Pipe Co 1999 (7) TMI 57 - DELHI High Court wherein that the Tribunal had found that the assessee had furnished confirmations from the cash creditors and it was only when the Assessing Officer wanted him to produce these creditors, including Y in whose case summons sent under section 131 of the Income Tax Act, 1961, were received back unserved, that the assessee found it expedient to surrender the amounts, but merely because the assessee had surrendered the amounts it did not follow that the amount agreed to the added represented its concealed income. The surrender so made also stood accepted and the Revenue had brought no material on record, besides the factum of the assessee. The Tribunal was justified in cancelling the penalty Assessee has not furnished inaccurate particulars of income, however, it is a case of change of opinion. Under these circumstances, in our view the penalty in dispute is totally unwarranted and deserve to be deleted. Accordingly, we delete the penalty in dispute made u/s. 271(1)(c) of the I.T. Act and cancel the orders of the authorities below on the issue in dispute. - Decided in favour of assessee.

Summary

Issues:
1. Whether penalty under section 271(1)(c) of the Income Tax Act was rightly imposed on the Assessee.
2. Whether there was a change of opinion justifying the deletion of the penalty.

Issue 1:
The appeal was filed by the Assessee against the order passed by the Ld. CIT(A), Muzaffarnagar, relating to the Assessment Year 2009-10. The Assessee contested the imposition of penalty under section 271(1)(c) of the Income Tax Act, claiming that there was no concealment of income or furnishing of inaccurate particulars. The case revolved around cash deposits of Rs. 10,00,000 in the Assessee's bank account, which the AO treated as unexplained credit under section 68 of the Act. The Ld. CIT(A) added Rs. 1,59,500 to the Assessee's income from undisclosed sources, leading to the initiation of penalty proceedings. Despite the Assessee's surrender of the amount, the penalty was levied, and the AO was directed to compute it at 100%.

Issue 2:
During the appellate proceedings, the Ld. CIT(A) deleted the initial addition of Rs. 10,00,000 but added Rs. 1,59,500 to the Assessee's income. The penalty imposed by the Ld. CIT(A) was later reduced to Rs. 16,090. The Assessee argued for the deletion of the penalty, citing a change of opinion and no concealment of income. The Tribunal examined the case law and found that the Assessee had not furnished inaccurate particulars of income, emphasizing the need for findings of incorrect or false details to invoke penalty under section 271(1)(c). Referring to the decision in CIT vs. Reliance Petroproducts Pvt. Ltd., the Tribunal held that the Assessee's claim, even if not accepted by the AO, did not warrant penalty unless there was a deliberate act of concealment or furnishing of inaccurate particulars. Concluding that the penalty was unwarranted and based on a change of opinion, the Tribunal allowed the Assessee's appeal and deleted the penalty imposed under section 271(1)(c) of the Income Tax Act.

In conclusion, the Appellate Tribunal ITAT DELHI ruled in favor of the Assessee, holding that the penalty under section 271(1)(c) was unjustified due to a lack of inaccurate particulars or concealment of income. The Tribunal emphasized the importance of findings of incorrect or false details to invoke such penalties, citing relevant case law to support its decision. The penalty was deemed unwarranted, and the orders of the authorities below were canceled.