2018 (6) TMI 1554 - AT - Income Tax

Penalty u/s. 271(1)(c) - alleged concealment of income by the assessee - whether the imposition of the penalty is for concealment/furnishing inaccurate particulars of income and the levy of penalty is not sustainable? - majority decision - third member decision - Held that - The ld. third member after considering the submissions of the parties before him, decided the afore-referred question agreeing with the view expressed by the ld. JM, i.e., that the penalty order imposing a penalty u/s. 271(1)(c) in the manner afore-stated, is not sustainable in law. Reference for the purpose may be made to the discussion at paras 15 to 27 of his order (copy on record), which was also read out during hearing. Even as the said proceedings are only formal in nature, so as to apprise the parties of the decision by each of the three Members and, therefore, of the majority view, in consonance with which the final order by the tribunal is to be passed, no objection thereto was fairly raised by the CITDR during hearing. We accordingly hold that the penalty imposed in the manner afore-said is not sustainable in law. - Decided in favour of assessee.

Summary

Issues:
Appeal regarding the sustainability of penalty under section 271(1)(c) of the Income Tax Act, 1961.

Analysis:
The judgment involves a set of four Appeals by two Assessees for the assessment years 2008-09 and 2009-10. The Tribunal took up the Appeals together due to common issues. A difference of opinion arose between the Judicial Member (J.M.) and the Accountant Member (A.M.) regarding the sustainability of the penalty under section 271(1)(c) of the Income Tax Act. The J.M. believed that the penalty imposed for concealment/furnishing inaccurate particulars of income was not valid in law, while the A.M. argued that stating both limbs for which the penalty is leviable is inconsequential. A reference was made to the Hon'ble President of the tribunal to resolve this difference of opinion.

The third member rendered an opinion agreeing with the J.M. that the penalty order imposing a penalty under section 271(1)(c) in the manner stated was not sustainable in law. The third member's decision was based on the discussions in the order, which concluded that the penalty imposed was not valid. The penalty was directed to be cancelled, allowing the assessee's appeal.

During the hearing, other legal grounds were not pressed before the regular bench. The grounds related to the merits of the penalty on different additions were deemed not necessary for adjudication. Consequently, the appeals of the assessee were allowed, and the order was pronounced in open court on June 20, 2018.