2009 (7) TMI 22 - HC - Income Tax

Penalty u/s 271(1)(C) Whether mandatory whether decision of Supreme Court in the matter of Union of India v. Dharmendra Textile Processors 2008 -TMI - 31520 - SUPREME COURT to be following in each case held that The judgment of the Hon ble Supreme Court in cannot be read as laying down that in every case where particulars of income are inaccurate, penalty must follow. What has been laid down is that qualitative difference between criminal liability under section 276C and penalty under section 271(1) ( c) had to be kept in mind and approach adopted to the trial of a criminal case need not be adopted while considering the levy of penalty. Even so, concept of penalty has not undergone change by virtue of the said judgment. Penalty is imposed only when there is some element of deliberate default and not a mere mistake. Penalty is not imposable in the present case.

Summary

The Punjab and Haryana High Court judgment of 2009 involved an appeal by the revenue against the Income Tax Appellate Tribunal's order regarding penalty under section 271(1)(c) of the Income Tax Act for the assessment year 2005-06. The Tribunal had deleted the penalty imposed by the Assessing Officer for furnishing inaccurate particulars of income. The assessee claimed a set off for capital loss against business profits, which was disallowed, leading to penalty proceedings. The CIT(A) and Tribunal both held that the penalty was not justified as the mistake was due to counsel's negligence and not a deliberate attempt to evade tax. The High Court dismissed the appeal, stating that the penalty could only be imposed in cases of deliberate default, not mere mistakes. Therefore, the substantial questions of law proposed in the appeal were deemed not to arise for consideration.