2021 (6) TMI 396 - AT - Income Tax

Penalty u/s. 271(1)(c) - recording of specific finding or not? - defective notice u/s 274 - exemption u/s. 54F is not allowable against short term capital gain - HELD THAT - While passing final order the Assessing Officer has to record a specific finding for which breach he has visited the assessee with penalty i.e. for concealment of income or furnishing inaccurate particular of income as laid down in the decision of Jurisdictional High Court of Gujarat in the case of Sunita Transport 2012 (12) TMI 981 - HIGH COURT OF GUJARAT . In para 7 of the penalty order u/s. 271(1)(c), the Assessing Officer held that it is found to be a fit case to levy penalty u/s. 271(1)(c) of the I.T. Act, 1961, for furnishing of inaccurate particulars and concealment of income to the extent of ₹ 7,30,000/- which indicate that Assessing Officer has not recorded specific finding in respect of reason for imposing penalty in the final penalty order. As considered the similar decision of ITAT Ahmedabad in the case of Sh. Hasmukh Jayantilal Thakkar 2018 (6) TMI 30 - ITAT AHMEDABAD wherein penalty was deleted following the decision of Sunita Transport because of not mentioning specific charges in the penalty order. In the light of the above facts and findings we observe that the Assessing Officer has not mentioned the specific charge in penalty order whether it was levied for concealment of income or for furnishing inaccurate particulars of income. Therefore, the principles laid down by the Hon ble High Court as supra are squarely applicable to the facts of this case and such penalty order is not sustainable. Accordingly, this ground of appeal of the assessee is allowed.

Summary

Issues:
- Confirmation of penalty under section 271(1)(c) of the Income Tax Act, 1961
- Whether penalty was imposed for furnishing inaccurate particulars of income or concealment of income

Analysis:
The case involved an appeal against the confirmation of a penalty under section 271(1)(c) of the Income Tax Act, 1961. The Assessing Officer had added a certain amount to the total income of the assessee due to a claim being considered wrongly made. The issue revolved around whether the penalty was imposed for furnishing inaccurate particulars of income or concealment of income. The assessee argued that the penalty order lacked a firm conclusion regarding the reason for imposing the penalty. The assessee cited relevant judgments emphasizing the necessity for the Assessing Officer to specify whether the penalty is for inaccurate particulars or concealment. The ITAT Ahmedabad and Surat Bench decisions were referenced to support the assessee's contention. The assessee maintained that the claim made was bonafide and not an attempt to conceal income. The Departmental Representative supported the CIT(A)'s order.

During the assessment, it was found that the assessee had claimed a deduction under section 54F against short term capital gain, which was disallowed by the Assessing Officer. In the penalty proceedings, the assessee argued that the disallowance should not be considered as furnishing inaccurate particulars of income since all details were disclosed in the Profit and Loss Account and return of income. The notice issued by the Assessing Officer mentioned concealment or furnishing inaccurate particulars of income. The ITAT observed that the penalty order lacked a specific finding on the reason for imposing the penalty, in line with the decision of the Jurisdictional High Court. Citing relevant case laws, the ITAT emphasized the necessity for a clear finding on whether the penalty is for concealment or inaccurate particulars. The ITAT concluded that the penalty order was not sustainable due to the absence of specific charges mentioned. Consequently, the appeal of the assessee was allowed, and the penalty was set aside.

In conclusion, the ITAT Ahmedabad ruled in favor of the assessee, highlighting the importance of a specific finding on whether a penalty under section 271(1)(c) is being imposed for furnishing inaccurate particulars of income or concealment of income. The judgment emphasized the need for clarity in penalty orders to ensure fairness and adherence to legal principles.