2019 (9) TMI 187 - AT - Income Tax

Penalty levied u/s 271(1)(c) - whether there was concealment of income or filing of inaccurate particulars - HELD THAT - In the instant case, the assessee has furnished all the details to the AO as well as to the Special Auditor appointed by the Department. AO has failed to bring any material to justify that there was concealment of income or filing of inaccurate particulars. In the case of CIT v. Reliance Petroproducts (P.) Ltd. 2010 (3) TMI 80 - SUPREME COURT held that the mere making of claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding income of assessee. Merely because assessee had claimed expenditure, which claim was not accepted or was not acceptable to the revenue, that by itself would not attract penalty u/s 271(1)(c) of the Act. Respectfully following the decision in Reliance Petroproducts (P.) Ltd. (supra), we uphold the order of the Ld. CIT(A). - Decided in favour of assessee.

Summary

Issues:
Penalty under section 271(1)(c) of the Income Tax Act 1961 - Cancellation of penalty - Interpretation of facts and law - Justification for penalty imposition - Concealment of income or filing inaccurate particulars - Disallowances by the Assessing Officer - Appeal against CIT(A) order - Appellant's submissions and explanations - AO's reliance on assessment order - Judicial precedents - Difference in opinion on deductions - Bona fide explanations - Levy of penalty on debatable issues - Furnishing inaccurate particulars of income - Compliance with accounting principles - Applicability of section 40(ba) - Disallowances upheld by CIT(A) - Tribunal's decision for AY 2003-04 applied to AY 2004-05.

Analysis:
The Appellate Tribunal ITAT Mumbai heard appeals by the Revenue against the Commissioner of Income Tax (Appeals) order regarding penalty under section 271(1)(c) of the Income Tax Act 1961. The appeals were consolidated due to common issues. The case involved the cancellation of a penalty amounting to ?12,30,38,547 imposed by the Assessing Officer (AO) for disallowances confirmed by the CIT(A). The AO levied the penalty based on additions made in the assessment. The CIT(A) deleted certain additions but upheld various disallowances, leading to the penalty imposition.

The CIT(A) canceled the penalty, stating that the AO failed to prove concealment of income or filing inaccurate particulars. The CIT(A) emphasized that differences in opinion do not automatically justify a penalty under section 271(1)(c). The tribunal upheld the CIT(A) order, citing the decision in CIT v. Reliance Petroproducts, where it was held that a mere unsustainable claim does not constitute furnishing inaccurate particulars. The tribunal found the appellant's explanations bona fide and compliant with accounting principles. The decision for AY 2003-04 was applied to AY 2004-05, and the appeals by the Revenue were dismissed.

The tribunal's ruling highlighted the importance of justifying penalty imposition under section 271(1)(c) by proving deliberate concealment or filing inaccurate particulars. It emphasized the need for a clear link between the additions/disallowances and intentional wrongdoing. The decision underscored the significance of bona fide explanations and compliance with legal provisions in determining the applicability of penalties. The judgment reaffirmed the principle that penalties should not be levied solely based on differences in interpretation or opinion, especially in complex tax matters.