2017 (1) TMI 1371 - AT - Income Tax

Penalty u/s. 271(1)(c) - Held that - No satisfaction for concealment was recorded for penalty of in dispute. We further note the AO observed that assessee furnished inaccurate particulars of its income and is liable for penalty u/s 271(1)(c), which did not establish from the facts and circumstances of the case that how the assessee has furnished inaccurate particulars of its income. Section 271(1)(c) postulates imposition of penalty for furnishing of inaccurate particulars and concealment of income. I Hon ble Apex Court in the case of CIT vs. Reliance Petroproducts Pvt. Ltd. (2010 (3) TMI 80 - SUPREME COURT ) wherein the Hon ble Supreme Court has held that where there is no findings that any details supplied by the assessee in its return are found to be incorrect or erroneous or false, there is no question of inviting the penalty u/sec. 271(1)(c) of the Act. A mere making a claim, which is not sustainable in law, by itself, will not amount of furnishing inaccurate particulars regarding the income of the assessee - Decided in favour of assessee

Summary

Issues involved:
- Levy of penalty on income from garment business without substantiating manipulation and tampering
- Whether penalty under section 271(1)(c) is justified based on assessment and appellate orders
- Concealment of income and furnishing inaccurate particulars

Analysis:

1. Levy of penalty on income from garment business without substantiating manipulation and tampering:
The appeals were filed against separate orders passed by the Ld. CIT(A) relating to Assessment Year 2003-04 to 2005-06. The common issue in all appeals was the levy of penalty on the losses incurred by the Assessee from the garment business without substantiating any manipulation or tampering. The AO imposed penalties under section 271(1)(c) of the Income Tax Act, 1961, based on disallowances made in the assessment order and upheld in the appellate orders in quantum appeals. The counsel for the Assessee argued that there was no concealment of income and the disallowances were not supported by seized material or other documentary evidence.

2. Justification of penalty under section 271(1)(c) based on assessment and appellate orders:
The Appellate Tribunal noted that the AO did not record any satisfaction for concealment regarding the penalty in dispute. It was observed that the Assessee did not furnish inaccurate particulars of income, as required under section 271(1)(c). Referring to the decision of the Hon'ble Supreme Court in CIT vs. Reliance Petroproducts Pvt. Ltd., it was emphasized that mere making a claim not sustainable in law does not amount to furnishing inaccurate particulars. The Tribunal held that the penalty was unwarranted as there were no findings that the details furnished by the Assessee were incorrect or false.

3. Concealment of income and furnishing inaccurate particulars:
The Tribunal, following the precedent and the principles laid down by the Supreme Court, concluded that the Assessee had not furnished inaccurate particulars of income. It was reiterated that the details provided by the Assessee in the return were not found to be inaccurate, erroneous, or false. Therefore, the penalty under section 271(1)(c) was deemed unjustified and was deleted for all the assessment years 2003-04 to 2005-06. Consequently, all three appeals filed by the Assessee were allowed, and the penalties were canceled.

In conclusion, the Appellate Tribunal found that the penalties imposed on the Assessee for the losses incurred in the garment business were not justified as there was no evidence of concealment or furnishing inaccurate particulars of income. The decision was based on legal principles and the lack of findings supporting the imposition of penalties.