2018 (5) TMI 1747 - AT - Income Tax

Penalty imposed u/s 271(1)(c) - deposit of surplus funds in FDRs - Held that - When the assessee has accepted the quantum, paid the taxes as well as interest pursuant to the decision rendered by Hon ble Uttarakhand High Court and confirmed by Hon ble Apex Court whereby deposit of surplus funds in FDRs are held to be not covered by Doctrine of Mutuality, we are of the considered view that it does not amount to concealment of particulars of income and furnishing of inaccurate particulars of income particularly when all the necessary details were already furnished by the assessee at the time of filing original return in accordance with the settled principles of law as per decision rendered by Hon ble Apex Court in Chelmsford Club (2000 (3) TMI 4 - SUPREME COURT) case AO has failed to make out the case of concealment of income or furnishing of inaccurate particulars of such income by the assessee rather it is a case of imposing penalty on the basis of decision rendered by the Hon ble Apex Court in Bangalore Club (2013 (1) TMI 343 - SUPREME COURT) case which was not in the notice of assessee at the time of filing the return pursuant to the notice u/s 148 of the Act sufficient to attract the provisions contained u/s 271(1)(c), so we find no illegality or perversity in the deletion of penalty made by the ld. CIT (A). Consequently, all the aforesaid appeals filed by the Revenue are hereby dismissed

Summary

Issues:
- Whether penalty imposed under section 271(1)(c) should be deleted.
- Whether the assessee concealed or furnished inaccurate particulars of income during assessment proceedings.

Analysis:

Issue 1: Whether penalty imposed under section 271(1)(c) should be deleted.
The Appellate Tribunal noted that the penalty proceedings were initiated based on additions made by the Assessing Officer (AO) for interest on Fixed Deposit Receipts (FDRs) and messing commissions for a specific assessment year. The penalty was levied on the grounds that the assessee furnished inaccurate particulars of income leading to concealment. The Commissioner of Income-tax (Appeals) (CIT (A)) had deleted the penalty in all three appeals after partially allowing them. The Tribunal found that the assessee had brought all necessary details in the return of income, and the issue in question was debatable at the time of filing the original return. The Tribunal concluded that the penalty was imposed based on a decision of the Hon'ble Apex Court that was not known to the assessee at the time of filing the return post-reopening under section 148 of the Income-tax Act. Therefore, the Tribunal dismissed the appeals filed by the Revenue, upholding the deletion of the penalty by the CIT (A).

Issue 2: Whether the assessee concealed or furnished inaccurate particulars of income during assessment proceedings.
The Tribunal examined whether the assessee concealed particulars of income or furnished inaccurate particulars during assessment proceedings. It was established that the issue was debatable at the time of filing the original return, and the assessee had provided all necessary details regarding interest income on FDRs and messing up charges. The Tribunal referenced the settled proposition of law by the Hon'ble Apex Court in the Chelmsford Club case, emphasizing that the business of the assessee was governed by the Doctrine of Mutuality. As the assessee had already disclosed all relevant details in accordance with established legal principles, the Tribunal concluded that there was no concealment or furnishing of inaccurate particulars of income by the assessee. The Tribunal held that the penalty was imposed based on a subsequent decision of the Hon'ble Apex Court that was not known to the assessee at the time of filing the return post-reopening under section 148. Therefore, the Tribunal found no illegality in the deletion of the penalty by the CIT (A) and dismissed the Revenue's appeals.

In conclusion, the Appellate Tribunal upheld the decision to delete the penalty imposed under section 271(1)(c), emphasizing that the assessee had not concealed or furnished inaccurate particulars of income during the assessment proceedings. The Tribunal considered the debatable nature of the issue at the time of filing the original return and the lack of awareness regarding a subsequent legal decision that formed the basis for the penalty imposition.