2020 (1) TMI 1481 - AT - Income Tax

Penalty u/s 271(1) (c) - expenditure incurred on BQS - Revenue or capital expenditure - HELD THAT - CIT(A) has given a reasoned and detailed order as to why the penalty cannot be levied u/s 271(1)(c) as there is a deference of opinion on the issue of expenditure incurred on BQS whether it is capital or revenue. There is no case of the revenue that the assessee filed inaccurate particulars of income or concealed the income, as all the details in the original return as well as in the revised return was placed before the AO. Merely changing the stand as to how the trade income/expenditure as to be taken as capital or revenue, does not amount to furnishing of inaccurate of particulars or concealment of income. Therefore, the CIT(A) was right in deleting the penalty. There is no need to interfere with the findings of the CIT(A). The facts are identical in A.Y. 2008-09 as well. Therefore, both the appeals of the revenue are dismissed.

Summary

Issues:
Appeal against penalty under section 271(1)(c) of the Income Tax Act, 1961 for Assessment Years 2007-08 & 2008-09.

Analysis:

1. Issue 1: Penalty Deletion for Expenditure on Bus Queue Shelter
The appeals were filed by the Revenue against the order of the Commissioner of Income Tax [Appeals]-5, Delhi for the Assessment Years 2007-08 & 2008-09. The Revenue contended that the CIT(A) erred in deleting the penalty under section 271(1)(c) amounting to significant sums. The Revenue argued that the expenditure incurred on the construction of Bus Queue Shelter was capital in nature, justifying the penalty. However, the CIT(A) reasoned that there was a difference of opinion regarding the nature of the expenditure, whether capital or revenue. The CIT(A) found no evidence of inaccurate particulars or income concealment, as all details were provided to the Assessing Officer. The Tribunal upheld the CIT(A)'s decision, emphasizing that changing the treatment of trade income/expenditure does not constitute concealment. Hence, the penalty was rightly deleted for both assessment years.

2. Issue 2: Assessment and Penalty Imposition
The assessee, engaged in out-of-home advertising solutions, filed returns for the relevant years, initially showing income and later claiming losses due to expenditure on Bus Queue Shelters. The Assessing Officer disallowed the expenditure as capital in nature, leading to revised assessments and subsequent penalty imposition under section 271(1)(c) of the Act. The Revenue's argument was based on the belief that the assessee's actions amounted to furnishing inaccurate particulars or income concealment. However, the Tribunal found that the assessee's disclosure was transparent, and the change in treatment of expenditure did not indicate deliberate concealment. The CIT(A)'s decision to delete the penalty was upheld, as there was no evidence of intentional misrepresentation or concealment.

3. Decision and Conclusion
After considering the arguments from both sides, the Tribunal dismissed the Revenue's appeals against the penalty deletion for the Assessment Years 2007-08 & 2008-09. The Tribunal concurred with the CIT(A)'s reasoning that the change in the treatment of expenditure from revenue to capital did not amount to deliberate concealment or furnishing of inaccurate particulars of income. Therefore, the penalty under section 271(1)(c) was not warranted in this case. The Tribunal upheld the CIT(A)'s decision, emphasizing the absence of intentional misconduct on the part of the assessee. Consequently, the appeals of the Revenue were dismissed, and the penalty deletion was upheld for both assessment years.