2019 (9) TMI 559 - HC - Income Tax

Levy of penalty u/s 271(1)(c) - as assessee is liable for payment of Minimum Alternate Tax (MAT) under Section 115JB, however he had neither filed Form 29B, nor paid taxes as required to be paid under Section 115JB - HELD THAT - Admittedly, there is no allegation against the assessee before us that they had concealed particulars of their income. However, the allegation is inaccurate particulars have been furnished. AO while completing the assessment vide order dated 01.12.2011, does not record any finding that the particulars given by the assessee in the return of income is incorrect or inaccurate, but the conclusion of the AO is based upon an interpretation of the legal position and held that tax is payable under Section 115JB. The assessee's specific case was that they were advised to file the return of income in a particular fashion and prior to the assessment proceedings, their Chartered Accountant had passed away and this had led to the mistake, which the AO pointed out during the assessment proceedings. Thus, in our considered view, the assessee's case is not a case where the provisions of Section 271(1)(c) could have been invoked, as there has been no finding recorded by the AO that they have furnished inaccurate particulars or for concealing particulars. Order passed by the AO imposing penalty is perverse. Orders passed by the CIT(A) and the Tribunal confirming such orders are liable to be interfered with. Appeal filed by the assessee is allowed

Issues Involved:
1. Levy of penalty under Section 271(1)(c) of the Income-tax Act, 1961.
2. Filing of Form 29B and payment of Minimum Alternate Tax (MAT) under Section 115JB of the Income-tax Act, 1961.
3. Alleged concealment of income or furnishing inaccurate particulars by the assessee.

Issue-wise Detailed Analysis:

1. Levy of Penalty under Section 271(1)(c) of the Income-tax Act, 1961:
The primary issue in this case is whether the Tribunal was right in confirming the levy of penalty under Section 271(1)(c) of the Income-tax Act, 1961. The assessee argued that penalty can only be imposed when there is a conscious concealment or furnishing of inaccurate particulars. The mistake occurred due to wrong advice, and there was no intention to conceal or furnish inaccurate particulars. The Tribunal, however, dismissed the appeal, stating that the explanation offered by the assessee was not plausible and that the levy of penalty was justified.

2. Filing of Form 29B and Payment of Minimum Alternate Tax (MAT) under Section 115JB of the Income-tax Act, 1961:
The assessee did not file Form 29B nor paid taxes as required under Section 115JB of the Act. The Assessing Officer initiated penalty proceedings on this basis. The assessee contended that they were under the bona fide belief that they were not liable for tax due to being an STPI unit eligible for benefits under Section 10B of the Act. The Tribunal found this explanation insufficient and upheld the penalty.

3. Alleged Concealment of Income or Furnishing Inaccurate Particulars by the Assessee:
The Assessing Officer alleged that the assessee furnished inaccurate particulars by not filing Form 29B and not paying MAT. The assessee argued that there was no concealment or furnishing of inaccurate particulars, as the details relating to book profits were made available during the assessment proceedings. The Tribunal, however, held that the explanation was a bald one and not plausible. The Tribunal also noted that the decision in CIT vs. Nalwa Sons Investments Ltd. was not applicable to the facts of the case.

Judgment Analysis:
The High Court analyzed whether the penalty under Section 271(1)(c) was justified. The Court observed that the penalty notice did not clearly indicate the basis for the prima facie view that penalty was imposable. The Court noted that the assessee did not raise this issue before the Assessing Officer and thus did not invalidate the penalty proceedings on this ground. The Court further examined the explanation provided by the assessee, which included reliance on advice from a Chartered Accountant and subsequent filing of Form 29B during assessment proceedings.

The Court emphasized that for Section 271(1)(c) to be attracted, there must be concealment of particulars of income or furnishing inaccurate particulars. The Court found no finding by the Assessing Officer that the assessee furnished inaccurate or untrue particulars. The Court referred to the Supreme Court decision in Reliance Petroproducts Pvt. Ltd., which stated that mere acceptance of quantum assessment does not automatically lead to penalty. The Court concluded that the assessee's case did not warrant penalty under Section 271(1)(c), as there was no finding of inaccurate particulars or concealment.

Conclusion:
The High Court allowed the appeal filed by the assessee, answering the substantial question of law in favor of the assessee. The Court held that the penalty imposed by the Assessing Officer was perverse and set aside the orders of the CIT(A) and the Tribunal confirming the penalty.

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