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2020 (12) TMI 546 - AT - Income TaxLevy of penalty u/s 271(1)(c) - assessee has not provided any evidence or document to establish vacancy of the property therefore estimated the rental income from house property - HELD THAT - Penalty levied by the A.O for concealment of income is beyond the possibility of the assessee to obtain the confirmation as the tenant has already left the premises in the A.Y 2008-09 which was submitted in the penalty proceedings. The A.O cannot ask the assessee to do a impossible task considering the facts and circumstances. We relay on the decision of CIT Vs. Reliance Petroproducts Ltd 2010 (3) TMI 80 - SUPREME COURT and follow the judicial precedents and we set aside the order of the CIT(A) and direct the A.O to delete penalty and allow the grounds of appeal of the assessee.
Issues:
- Appeal against penalty orders under sections 271(1)(c) and 250 of the Income Tax Act. - Challenge of the levy of penalty for non-offering of rental income. - Assessment of penalty by the Assessing Officer. - Consideration of explanations provided by the assessee. - Application of legal principles for penalty imposition. - Comparison of facts and circumstances in different assessment years. Analysis: 1. The appeals were filed by the assessee against the penalty orders under sections 271(1)(c) and 250 of the Income Tax Act. The issues revolved around the confirmation of the penalty levied for non-offering of rental income and the jurisdiction of the orders passed by the Ld. CIT(A). 2. In the case of the A.Y 2009-10, the Assessing Officer (A.O) found that the assessee had not provided complete information and failed to produce books of accounts. The A.O made additions to the income, including an estimated rental income from a property. Subsequently, penalty proceedings were initiated under section 271(1)(c) of the Act. The CIT(A) confirmed the penalty, but the ITAT found that the penalty imposition was not automatic and relied on legal principles to set aside the penalty order. 3. The ITAT emphasized that the penalty for concealment of income was unjustified as the tenant had vacated the premises in the relevant assessment year, making it impossible for the assessee to obtain confirmation. Citing the decision in CIT Vs. Reliance Petroproducts Ltd, the ITAT directed the A.O to delete the penalty for the A.Y 2009-10. 4. In the case of the A.Y 2010-11, similar issues arose regarding the levy of penalty for non-submission of evidence for expenditure claims and non-receipt of rental income. The assessee provided explanations, but the penalty was still imposed. The ITAT, considering the identical facts and circumstances, set aside the CIT(A) order and directed the A.O to delete the penalty for the A.Y 2010-11 as well. 5. The ITAT allowed both appeals filed by the assessee, emphasizing the importance of considering explanations provided by the assessee and applying legal principles for penalty imposition. The judgments highlighted the need for a clear direction in penalty proceedings and the distinction between assessment and penalty proceedings. 6. Ultimately, the ITAT's detailed analysis and application of legal principles resulted in the deletion of the penalties imposed by the A.O, providing relief to the assessee in both assessment years.
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