2019 (1) TMI 998 - AT - Income Tax

Penalty levied u/s 271(1)(c) - addition on account of deposits made in the saving bank account - proof of concealing the particulars of income - defective notice - Held that - In the present case, it is an admitted fact that the AO initiated the penalty proceedings u/s 271(1)(c) of the Act for concealing the particulars of income which is evident from page no. 5 of the assessment order dated 21.11.2011. However, the penalty was levied by the AO for furnishing of inaccurate particulars of income. Therefore, it is clear that the initiation of penalty proceedings were on different count then the levy of penalty. In that view of the matter, the penalty levied by the AO on different charge then the initiation of penalty proceedings was not justified - Decided in favour of assessee.

Summary

Issues: Appeal against penalty under section 271(1)(c) of the Income Tax Act, 1961.

Detailed Analysis:

- Issue 1: Confirmation of Penalty
The appeal was filed against the penalty imposed by the Assessing Officer (AO) under section 271(1)(c) of the Income Tax Act, 1961. The penalty amount was &8377; 1,69,073. The assessee's grievance was related to the confirmation of this penalty by the ld. CIT(A). The AO had initiated the penalty for concealing the particulars of income, but the penalty was levied for furnishing inaccurate particulars of income. The discrepancy between the initiation and imposition of the penalty led to the appeal.

- Issue 2: Assessment and Penalty Proceedings
The facts of the case indicated that the assessee initially declared an income of &8377; 3,40,690, which was later increased to &8377; 9,40,690 by the AO due to additional deposits in the saving bank account. The ld. CIT(A) upheld this addition, leading to the imposition of the penalty by the AO. The assessee contended that the penalty initiation and imposition were based on different grounds, highlighting a procedural error in the penalty proceedings.

- Issue 3: Adjudication and Decision
After considering the submissions of both parties and reviewing the available material, the Tribunal found that the penalty initiation by the AO for concealing income differed from the penalty imposed for furnishing inaccurate particulars of income. This discrepancy rendered the penalty unjustified. The Tribunal held that the ld. CIT(A) erred in confirming the penalty without recognizing this crucial distinction. Consequently, the Tribunal allowed the appeal and deleted the impugned penalty.

In conclusion, the Tribunal ruled in favor of the assessee, emphasizing the importance of aligning the grounds for penalty initiation and imposition. The judgment highlighted the necessity for consistency in penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961.