2012 (8) TMI 1162 - AT - Income Tax

Summary

Issues Involved:
1. Deletion of penalty u/s 271(1)(c) of the Income Tax Act, 1961 for filing the original return beyond the due date u/s 139(1).
2. Calculation of penalties based on the difference between the tax on the income shown in the first returns and the tax on the incomes assessed.
3. Failure of the assessee to perform a statutory obligation.
4. Deletion of penalty without considering relevant case laws.
5. Applicability of the Hon'ble Supreme Court's decision in CIT Central - III vs. Surya Herbal Ltd. despite the tax effect being below Rs. 3 lakhs.

Summary:

Issue 1: Deletion of Penalty u/s 271(1)(c) for Late Filing of Return
The assessee filed the original return beyond the due date u/s 139(1) and subsequently revised it within a few days. The CIT(A) observed that both returns were filed voluntarily and not after detection by the Income Tax Department. The Tribunal upheld the CIT(A)'s decision, referencing the Supreme Court's ruling in G.L. Didwania vs. ITO, which states that penalty should not be imposed unless there is deliberate defiance of law or dishonest conduct.

Issue 2: Calculation of Penalties
The Tribunal noted that the assessee revised the return within a short period after discovering an omission. The act of revising the return was seen as an honest correction rather than an admission of concealment. The Tribunal concurred with the CIT(A) that the penalty on the difference between the original and revised returns was not justified.

Issue 3: Failure to Perform Statutory Obligation
The Tribunal agreed with the CIT(A) that the assessee's act of revising the return promptly after discovering the omission demonstrated a bona fide belief and correction, thus not warranting a penalty for failure to perform a statutory obligation.

Issue 4: Deletion of Penalty Without Considering Relevant Case Laws
The Tribunal found that the AO's reliance on certain case laws was not applicable to the present facts and circumstances. The CIT(A) had rightly distinguished these cases, and the Tribunal upheld this view.

Issue 5: Applicability of Supreme Court's Decision Despite Low Tax Effect
The Tribunal dismissed the Revenue's appeal, noting that the facts of the case did not warrant the application of the Supreme Court's decision in CIT Central - III vs. Surya Herbal Ltd., as the issues were resolved based on the bona fide actions of the assessee.

Conclusion:
The Tribunal dismissed the appeals filed by the Revenue in both cases, upholding the CIT(A)'s decision to delete the penalties imposed u/s 271(1)(c) of the Income Tax Act, 1961. The order was pronounced in the open court on 6th August 2012.