2019 (12) TMI 256 - AT - Income Tax

Levy of penalty u/s penalty u/s 271(1)(b) - addition of penalty expenses on account of excise duty - Concealment of income or not - non-disclosure of material facts - HELD THAT - During the course of assessment proceedings the AO asked the assessee about the expenses on account of excise duty of ₹ 2,01,285/- made being penalty which was detected by the AO during the course of assessment proceedings and assessee has accepted and paid the tax thereon and did not file any appeal before the Ld. First Appellate Authority against the addition in dispute on which the penalty has been imposed. The assessee has concealed its income and has not disclosed in the return of income and not paid the tax thereon. But only on asking by the AO about the expenses on account of excise duty amounting to ₹ 2,01,284/-, the assessee accepted his fault thereon and did not file appeal against this addition also. Even otherwise the amount in the nature of penalty for violation of excise law which the assessee has paid is not a business expenses. These facts also not disclosed in the return of income and were detected during the assessment proceedings. Therefore, that it was also a case of non disclosure of material facts which attracts Explanation 1 to section 271(1)(c) of the Act. No interference is called for in the well reasoned order passed by the Ld. First Appellate Authority - the grounds raised by the Ld. CIT(A) is rejected - appeal of assessee dismissed.

Summary

Issues:
1. Confirmation of penalty u/s 271(1)(b)
2. Fair opportunity provided by Ld. CIT(A)
3. Consideration of replies filed before Ld. CIT(A)
4. Nature of claim for penalty expenses
5. Proper recording of satisfaction by Ld. ACIT
6. Ex-parte decision due to non-appearance of assessee
7. Concealment of income and non-disclosure of material facts

Analysis:

1. Confirmation of penalty u/s 271(1)(b): The appeal was filed against the penalty imposed by the Ld. ITO u/s 271(1)(b). The Hon'ble CIT(A) confirmed the penalty, leading to the appeal before the ITAT.

2. Fair opportunity provided by Ld. CIT(A): The appellant argued that the Ld. CIT(A) passed the order hastily without providing a fair opportunity. However, the Ld. CIT(A) dismissed the appeal, stating that the penalty was justified.

3. Consideration of replies filed before Ld. CIT(A): The appellant claimed that the replies filed were not considered by the Ld. CIT(A) during the assessment proceedings. The Ld. CIT(A) upheld the penalty, citing non-disclosure of material facts.

4. Nature of claim for penalty expenses: The AO made an addition for penalty expenses related to excise duty. The appellant argued that the penalty was inadvertently claimed and voluntarily offered for taxation. However, the AO and Ld. CIT(A) held that the penalty was not a business expense and attracted Explanation 1 to section 271(1)(c) of the Act.

5. Proper recording of satisfaction by Ld. ACIT: The appellant contended that the satisfaction was not properly recorded by the Ld. ACIT, and no show cause notice was given. The ITAT upheld the decision of the Ld. CIT(A) regarding the penalty.

6. Ex-parte decision due to non-appearance of assessee: Despite multiple notices, the appellant did not appear before the ITAT, leading to an ex-parte decision in the interest of justice.

7. Concealment of income and non-disclosure of material facts: The ITAT upheld the penalty imposed by the AO u/s 271(1)(c) for concealment of income and non-disclosure of material facts related to penalty expenses on excise duty. The ITAT found no reason to interfere with the decision of the Ld. CIT(A) and dismissed the appeal, affirming the penalty.