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2017 (8) TMI 744 - AT - Income TaxPenalty u/s 271(1)(c) - amount parked in the Suspense account by the assessee - Held that - As assessment proceedings are separate and distinct from penalty proceedings, therefore, now when the aforesaid amount of ₹ 2,76,180/- (supra) was to be held as the Unexplained money of the assessee under Sec. 69, then the same as per the said clearly worded statutory provision could only be related to and held as the income of the assessee for the year in which the investment is found to have been made by the assessee. We thus circumscribing our observations solely for the purpose of adjudication of the present appeal, are thus of the considered view that on the basis of the aforesaid material fact itself, which we find had though categorically been raised by the assessee before the CIT(A), but had not been adverted to by the latter, no penalty under Sec. 271(1)(c) could be justified in respect of the amount of ₹ 2,76,180/-(supra) during the year under consideration, viz. A.Y. 2008-09. That as we have quashed the levy of penalty imposed by the A.O under Sec. 271(1)(c) on the basis of our aforesaid observations, we therefore refrain from adverting to the other contentions raised by the assessee before the lower authorities while assailing the validity of the penalty imposed. Appeal of the assessee is allowed.
Issues Involved:
Penalty under Sec. 271(1)(c) for furnishing inaccurate particulars of income. Detailed Analysis: 1. Background: The appeal was filed against the order of the CIT(A) for A.Y. 2008-09, arising from the order passed by the A.O under Sec. 271(1)(c) of the Income-tax Act, 1961. The assessee challenged the penalty of ?85,340 levied under Sec. 271(1)(c). 2. Assessment Proceedings: The assessee, engaged in office assistant services, filed its return of income declaring total income of ?2,94,999. During scrutiny assessment, an amount of ?2,76,180 found in the bank account under 'Suspense account' was treated as unexplained income by the A.O, leading to penalty proceedings under Sec. 271(1)(c). 3. Penalty Imposition: Despite the assessee's explanations, the A.O imposed a penalty, which was confirmed by the CIT(A). The assessee contended that the amount was deposited in a previous year and later transferred to the Profit & Loss account, demonstrating bonafide intentions. 4. Appeal to ITAT: The assessee appealed to ITAT, emphasizing the chronological details of the amount and asserting that no penalty was warranted. However, during the hearing, no representation was made by the assessee, prompting the ITAT to proceed based on available records. 5. ITAT Decision: ITAT noted that penalty proceedings are distinct from assessment proceedings and analyzed the validity of the penalty imposed. Considering the statutory provisions, ITAT concluded that the amount in question could only be related to the year of investment. As the CIT(A) did not address this crucial aspect, ITAT found no justification for the penalty under Sec. 271(1)(c) for the year under consideration. 6. Verdict: Given the above analysis, ITAT allowed the appeal, setting aside the penalty of ?85,340 imposed on the assessee under Sec. 271(1)(c) for furnishing inaccurate particulars of income. This detailed analysis showcases the progression of the case, the arguments presented by the parties, and the legal reasoning behind the final decision by ITAT to quash the penalty imposed on the assessee.
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