2014 (12) TMI 1338 - AT - Income Tax

Penalty u/s 271(1)(c) - inaccurate particulars or concealment of income - HELD THAT - We find that section 271(1)(c) postulates imposition of penalty for furnishing of inaccurate particulars and concealment of income. On the facts and circumstances of this case the assessee s conduct cannot be said to be contumacious so as to warrant levy of penalty. - See Case of COMMISSIONER OF INCOME-TAX VERSUS RELIANCE PETROPRODUCTS PVT. LTD. 2010 (3) TMI 80 - SUPREME COURT mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the Return cannot amount to the inaccurate particulars. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, in our opinion, attract the penalty under s. 271(1)(c). - Decided in favour of assessee.

Summary

Issues:
1. Penalty imposed under section 271(1)(c) without providing an opportunity to be heard.
2. Imposition of penalty based on ITAT order and alleged inaccurate particulars of income.
3. Right of the assessee to modify grounds during appeal proceedings.

Analysis:

Issue 1:
The first issue revolves around the penalty imposed under section 271(1)(c) without providing an opportunity to be heard. The appellant contended that the penalty was imposed without following the principles of natural justice as no opportunity was given to present their case. The Ld. CIT(A) confirmed the penalty, leading to the appeal. However, the Tribunal found that the conduct of the assessee did not warrant the levy of penalty, emphasizing the importance of providing an opportunity to be heard before imposing penalties.

Issue 2:
The second issue concerns the imposition of the penalty based on an ITAT order and alleged inaccurate particulars of income. The Assessing Officer received information regarding the assessee's involvement in providing bogus accommodation entries, leading to the addition of an amount to the assessee's income from undisclosed sources. Despite the deletion of the addition in the first appeal, a portion was confirmed by the ITAT. The penalty under section 271(1)(c) was levied for concealment of income, which the appellant contested, citing the Supreme Court judgment in Commissioner of Income Tax vs. Reliance Petroproducts Pvt. Ltd. The Tribunal, considering the facts and the applicable legal precedent, concluded that the levy of penalty was not justified and set aside the orders of the lower authorities.

Issue 3:
The third issue pertains to the right of the assessee to add, delete, or modify grounds during the appeal proceedings. The appellant argued for the modification of grounds during the appeal, highlighting the differing views taken by revenue authorities in similar cases. The Departmental Representative supported the penalty imposition, referencing findings from the ITAT. However, the Tribunal, after considering the arguments and orders passed by the Revenue authorities, ruled in favor of the assessee, emphasizing that the mere making of a claim not sustainable in law does not amount to furnishing inaccurate particulars regarding income.

In conclusion, the Tribunal allowed the appeal filed by the Assessee, setting aside the penalty imposed under section 271(1)(c) based on the facts and legal precedents discussed during the proceedings.