2019 (2) TMI 658 - HC - Income Tax

Penalty imposed under Section 271(1)(c) - excessive claim of wastage - block assessment u/s 153A - Held that - We need only refer to Section 271(1)(c) which not only speaks of concealment of particulars of income but also furnishing inaccurate particulars of such income. The additions made, to the extent confirmed by this Court, definitely leads to a finding of inaccurate particulars having been furnished which would enable invocation of Section 271(1)(c). We hence answer the said questions of law against the assessee and in favour of the Revenue. The order of penalty was passed after the Tribunal s order in the assessment was received, within the limitation period, noticing that the Tribunal had upheld the block assessment made by the Assessing Officer. The penalty order passed also has now been upheld by us and the contention of limitation rejected. This Court, in the assessment, modified the additions in favour of the assessee. Hence, if the limitation under the proviso to sub-section (1A) is said to operate, there could be no modification made of the order passed under Section 271 based on the order of the High Court. This would only be detrimental to the assessee since otherwise the assessee would have to pay the penalty as imposed in the impugned orders without the benefit of the modification being made available to the assessee. We do not think that the intention of the legislature was to prohibit the assessee from getting the benefit of an order in appeal before the higher authorities for reason only of the Department having not acted with expediency. We, hence, reject the said contention also and answer the first question against the assessee and in favour of the Revenue, which in fact would enure to the benefit of the assessee by enabling revision of penalty, as per the judgment of the High Court.

Issues Involved:
1. Justification of the Tribunal in directing the assessing officer to re-work the quantum of penalty.
2. Justification of the Tribunal in directing the assessing officer to recompute the penalty without a clear finding of concealment of income.
3. Availability of materials before the appellate Tribunal to conclude concealment of income for levy of penalty under Section 271(1)(c) of the Income Tax Act.
4. Limitation of the penalty order dated 31.07.2008 in terms of the CBDT Circular reported in 290 ITR(st) 86.

Detailed Analysis:

1. Justification of the Tribunal in directing the assessing officer to re-work the quantum of penalty:
The Tribunal directed the assessing officer to re-work the quantum of penalty in terms of the High Court's order. The court examined Section 275(1)(a) and its proviso, which extends the limitation period for passing a penalty order to one year from the end of the month in which the first appellate order is received. The court clarified that the proviso does not render the main provision otiose and that the limitation period extends further if a second appeal is filed to the Tribunal. The penalty order dated 31.07.2008 was within the limitation period, as it was passed within six months from the end of the month in which the Tribunal's order was received. Hence, the Tribunal's direction to re-work the penalty was justified and upheld, benefiting the assessee by enabling revision of the penalty as per the High Court's judgment.

2. Justification of the Tribunal in directing the assessing officer to recompute the penalty without a clear finding of concealment of income:
The court referred to Section 271(1)(c), which addresses both concealment of particulars of income and furnishing inaccurate particulars of such income. The confirmed additions by the court indicated that inaccurate particulars were furnished, justifying the invocation of Section 271(1)(c). Therefore, the Tribunal's direction to recompute the penalty was justified, as there was a basis for finding inaccurate particulars of income. The court answered the questions of law against the assessee and in favor of the Revenue.

3. Availability of materials before the appellate Tribunal to conclude concealment of income for levy of penalty under Section 271(1)(c) of the Income Tax Act:
The court found that the materials available indicated the furnishing of inaccurate particulars of income, which justified the levy of penalty under Section 271(1)(c). The additions confirmed by the court led to the conclusion that inaccurate particulars were furnished, enabling the invocation of Section 271(1)(c). Thus, the Tribunal had sufficient material to conclude concealment of income for the levy of penalty, and the court answered this issue against the assessee and in favor of the Revenue.

4. Limitation of the penalty order dated 31.07.2008 in terms of the CBDT Circular reported in 290 ITR(st) 86:
The court addressed the argument of limitation raised by the assessee, referring to the proviso introduced under Section 275(1)(a) effective from 01.06.2003, which extends the limitation period for passing a penalty order to one year from the end of the month in which the first appellate order is received. The order of penalty dated 31.07.2008 was within the limitation period, as it was passed within six months from the end of the month in which the Tribunal's order was received. The court rejected the assessee's argument that the limitation period had expired and upheld the penalty order as being within the limitation period. Therefore, the court answered this issue against the assessee and in favor of the Revenue.

Conclusion:
The appeals were rejected, but the court directed the Assessing Officer to modify the penalty order in accordance with the assessments modified and upheld by the High Court in Annexure F, if not already done. No order as to costs was made.

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