2019 (4) TMI 1661 - AT - Income Tax

Penalty u/s 271(1)(c) - recording of satisfaction - penalty initiated u/s 143(3) order for concealment of particulars of income - penalty imposed for furnishing inaccurate particulars of income - HELD THAT - We find force in the plea of the assessee that where the penalty has been imposed on a ground different from the ground for which the penalty was originally initiated, the imposition of penalty is vitiated in law. It is apparent that the satisfaction of the AO in the penalty proceedings is not consistent with that of the satisfaction formed in the course of quantum assessment. In parity with the view taken by the co-ordinate bench, the penalty imposed is liable to be struck down on this score alone. Accordingly, we set aside the first appellate order passed by the CIT(A) in this regard and direct the AO to delete the penalty. - Decided in favour of assessee.

Summary

Issues:
Imposition of penalty under section 271(1)(c) of the Income Tax Act, 1961 concerning AY 2010-11.

Analysis:
The appeal was filed against the penalty order passed by the Assessing Officer (AO) under section 271(1)(c) of the Income Tax Act, 1961. The appellant contested the penalty of ?77,705 imposed by the AO for furnishing inaccurate particulars of income. The appellant argued that the penalty was not sustainable due to a lack of continuity in the satisfaction formed by the AO. The appellant cited a previous tribunal decision to support this contention. The Departmental Representative (DR) relied on the CIT(A)'s order. The Tribunal found that the penalty was not sustainable in law due to the lack of proper satisfaction about the default committed by the assessee. The Tribunal referred to a co-ordinate bench decision that emphasized the importance of proper satisfaction for penalty imposition. The Tribunal noted that the AO's satisfaction in the penalty proceedings did not align with that of the quantum assessment, leading to the penalty being vitiated in law. Therefore, the Tribunal set aside the CIT(A)'s order and directed the AO to delete the penalty, allowing the appeal of the assessee.

This detailed analysis of the judgment highlights the key arguments presented by the appellant, the response from the Departmental Representative, the Tribunal's assessment of the legal issue, and the ultimate decision to set aside the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961.