2015 (10) TMI 2837 - AT - Income Tax

Penalty u/s 271(1)(c) - disallowance made for no explanation regarding non-maintenance or non-production of bills/vouchers could be furnished by the assessee - income of the assessee was estimated by the Assessing Officer and the addition was sustained by the learned CIT(A) - HELD THAT - As in the absence of supporting evidence for allowability of the expenses claimed by the assessee, certain disallowance made could be sustained but this fact alone is not sufficient to sustain the penalty imposed u/s 271(1)(c) of the Act. There is no material brought on record on behalf of the Revenue to suggest that the assessee was guilty of concealment of income or filing of inaccurate particulars of income. Merely because the assessee could not file the supporting vouchers/bills for the expenses claimed by it, it could not be concluded that the assessee has claimed bogus expenses and could be penalized u/s 271(1)(c) of the Act. The conduct of the assessee was bona-fide and the assessee has filed an explanation before the Revenue authorities. In the facts of the case, we are of the view that it was not a fit case for levy of penalty u/s 271(1)(c) of the Act, which is accordingly cancelled and the ground of appeal of the assessee is allowed. Penalty u/s 271(1)(b) - As assessee was required to file certain information/documents before the Assessing Officer before the completion of assessment proceedings. However, the assessee has failed to comply with the statutory requirement without any valid reason and therefore, in my view, the penalty imposed at ₹ 10,000/- u/s 271(1)(b) of the Act was reasonable and is accordingly confirmed and the ground of appeal of the assessee is dismissed.

Summary

Issues involved:
1. Condonation of delay in filing appeals before the Tribunal.
2. Penalty under Section 271(1)(c) of the Income Tax Act.
3. Penalty under Section 271(1)(b) of the Income Tax Act.

Condonation of delay in filing appeals before the Tribunal:
The appeals by the assessee for the assessment year 2006-07 were directed against the order of the learned CIT(A)-XI, New Delhi. The appeals were decided ex-parte as no one appeared on behalf of the assessee. The appeals were found to be barred by limitation by 113 days before the Tribunal. The assessee explained the delay in filing the appeals due to the misplacement of records by an officer clerk, which were later traced. The delay was condoned by the Tribunal considering the reasons provided by the assessee.

Penalty under Section 271(1)(c) of the Income Tax Act:
In one appeal, the assessee challenged the penalty imposed under Section 271(1)(c) of the Income Tax Act. The penalty was imposed due to non-maintenance or non-production of bills/vouchers by the assessee, resulting in an estimation of income by the Assessing Officer. The Tribunal noted that while certain disallowances were justified, there was no evidence of concealment of income or filing inaccurate particulars. The Tribunal held that the penalty was not warranted as the conduct of the assessee was bona fide, and the expenses claimed were not proven to be bogus. Therefore, the penalty under Section 271(1)(c) was cancelled.

Penalty under Section 271(1)(b) of the Income Tax Act:
In another appeal, the assessee contested the penalty imposed under Section 271(1)(b) of the Income Tax Act. The Tribunal found a mistake in the amount of penalty mentioned in the appeal and confirmed the penalty at a reduced amount. The penalty was imposed as the assessee failed to provide required information/documents to the Assessing Officer without a valid reason. The Tribunal upheld the penalty under Section 271(1)(b) at the revised amount, dismissing the appeal of the assessee.

In conclusion, the Tribunal allowed the appeal of the assessee under Section 271(1)(c) while dismissing the appeal under Section 271(1)(b) for the assessment year 2006-07. The decision was pronounced in open court on 5th October 2015.