2018 (8) TMI 1893 - AT - Income Tax

Penalty u/s 271 - disallowance u/s 14A - HELD THAT - In the assessment order Ld.AO has not been able to establish regarding any concealment of material facts or furnishing of inaccurate particulars by assessee. It is observed that disallowance has been made by considering the figures, that were duly disclosed in the return and statement of accounts of assessee. Under such circumstances we do not find any infirmity in the orders passed by Ld. CIT (A) in deleting the penalty levied. Accordingly we dismiss the grounds raised by revenue.

Summary

Issues:
1. Deletion of penalty under section 271(1)(c) by Ld. CIT(A) based on the disallowance made under section 14A read with Rule 8D.
2. Whether there was concealment of income or furnishing of inaccurate particulars by the assessee justifying the penalty under section 271(1)(c).

Detailed Analysis:
Issue 1:
The Appellate Tribunal ITAT DELHI heard the penalty appeal filed by the revenue against the order passed by Ld. CIT(A) deleting the penalty of ?5,53,00,980/- under section 271(1)(c). The Ld. CIT(A) had sustained the addition made under section 14A read with Rule 8D(iii) of ?16,26,97,795/-. The assessee had filed its return of income declaring total income, which was revised later. The assessment order by Ld.AO computed disallowance under section 14A read with Rule 8D at ?1,71,24,78,792/-. The Ld.CIT(A) granted partial relief to the assessee by sustaining the addition of ?16,26,97,795/- under 8D(iii). The penalty proceedings were initiated under section 271(1)(c) for furnishing inaccurate particulars of income, and the Ld.AO imposed a penalty on the disallowance under section 14A. The Ld.CIT(A) deleted the penalty, stating that there was no intention to conceal income or evade tax, and the explanation provided by the assessee was satisfactory, with no doubts on the bona fides.

Issue 2:
The revenue appealed against the order of Ld.CIT(A) before the Appellate Tribunal. The Ld.AR representing the assessee argued that there was no error in furnishing inaccurate particulars or concealment of material facts. The AR contended that all relevant facts and explanations were provided during the assessment proceedings. It was highlighted that the disallowance under section 14A was debatable and contentious, citing a decision of the Hon’ble Delhi High Court. The Tribunal examined the submissions of both parties and found that the Ld.AO had not established any concealment or furnishing of inaccurate particulars by the assessee. The disallowance was based on disclosed figures, and no infirmity was found in the Ld. CIT(A)'s decision to delete the penalty. Consequently, the Tribunal dismissed the grounds raised by the revenue, upholding the deletion of the penalty.

In conclusion, the Appellate Tribunal upheld the Ld. CIT(A)'s decision to delete the penalty under section 271(1)(c) based on the disallowance made under section 14A read with Rule 8D. The Tribunal found no concealment of material facts or furnishing of inaccurate particulars by the assessee, leading to the dismissal of the revenue's appeal.