2018 (8) TMI 1367 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - assessee contended that, mere acceptance of the disallowance by the Appellant does not tantamount to furnishing of inaccurate particulars of income and more particularly on account of the fact that the Appellant had suo-moto accepted the disallowance and decided not to file any appeal with the ITAT to avoid genuine hardship, mitigate compliance cost and facilitate liquidation process and in view of the substantial past losses which would eventually lapse going forward. - assessee also contended that, the disallowances made represent just 1% of the expenses which is highly immaterial with the nature of business and expenses incurred by the company. Held that - In present year as well it is not a case of the Revenue that assessee furnished inaccurate particulars of the income or there is concealment of income on part of the assessee. Thus, the provisions of Section 271(1)(c) of the Act will not be attracted in the present case as well. - Penalty deleted - Decided in favor of assessee.

Summary

Issues involved:
1. Appeal against penalty order under section 271(1)(c) of the Income Tax Act, 1961 for Assessment Year 2011-12.

Detailed Analysis:
1. The appeal was filed by the assessee against the penalty order of ?47,40,699 confirmed by the CIT (A) for the subject assessment year. The grounds of appeal primarily challenged the imposition of penalty under section 271(1)(c) of the Act, arguing that no concealment of facts/income was made by the assessee. The appellant contended that acceptance of disallowance does not imply inaccurate particulars of income submission, especially considering the substantial losses incurred and the decision to avoid compliance costs by not appealing to the ITAT. The appellant also highlighted that all material facts were disclosed during assessment proceedings, and the penalty order was unjustified.

2. The case involved Carrefour WC&C India Private Limited, which had revised its return of income to declare a total loss. The Assessing Officer made additions to the income based on international transactions with associated enterprises, leading to a reduced loss amount. Subsequently, a penalty under section 271(1)(c) was imposed, which the appellant contested. The appellant argued that the penalty was unwarranted due to the company's accumulated losses, impending liquidation, and voluntary acceptance of disallowances to expedite assessment closure. The appellant emphasized that past losses would lapse, and no operational income was expected, justifying the decision not to appeal to the ITAT.

3. The Tribunal analyzed the appellant's contentions and referred to a previous decision in the appellant's own case for A.Y. 2010-11 where penalties were deleted due to lack of clear findings on concealment or inaccurate particulars of income. The Tribunal reiterated that penalty proceedings require positive evidence of concealment or inaccurate particulars, which was absent in this case. Citing precedents, the Tribunal concluded that the penalty under section 271(1)(c) was not justified as there was no proof of concealment or submission of inaccurate particulars of income. Therefore, the Tribunal allowed the appeal in favor of the assessee, emphasizing that the penalty provisions were not applicable in the absence of clear evidence of wrongdoing.

In conclusion, the Tribunal allowed the appeal, ruling in favor of the assessee based on the lack of evidence supporting the imposition of the penalty under section 271(1)(c) of the Income Tax Act, 1961. The decision highlighted the importance of positive evidence of concealment or inaccurate particulars to justify penalties, referencing past judgments to support the conclusion that the penalty was unjustified in the absence of such evidence.