2021 (8) TMI 24 - AT - Income Tax

Penalty levied u/s 271(1)(c) - assessee failed to explain the excess liability and no further appeal was filed by the assessee against the additions - HELD THAT - We find that the lower authorities while considering the reply of the assessee, filed in response to the show cause notice for levying the penalty, has not held that the reply of the assessee is false. On independent consideration of the reply of assessee, filed in response to the show cause notice under section 274 read with section 271(1)(c). We find that the assessee has given reasonable and plausible explanation that the accountant has committed mistake while preparing the accounts as the credit note sent by the sundry creditor was not came to his notice and there was attempt for tax evasion as the assessee suffered loss. In our view it was sufficient explanation and reasonable within the scope of section 273B of the Income tax Act. Thus, we accept the secondary submissions of the ld AR for the assessee and direct the assessing officer to delete the penalty levied under section 271(1)(c) of the Act. Considering the facts that we have deleted the penalty on merit, therefore, the discussions and adjudication of the technical or legal issue, raised by issue, has become academic. In the result the grounds of appeal raised by the assessee are allowed.

Summary

Issues Involved:
Appeal against penalty under section 271(1)(c) of the Income Tax Act for AY 2012-13.

Detailed Analysis:

Issue 1: Confirmation of penalty under section 271(1)(c) for furnishing inaccurate particulars.
- The assessee disputed the penalty of ?2,75,260 levied under section 271(1)(c).
- The Assessing Officer (AO) added ?8,90,808 for irreconcilable sundry creditors, alleging inaccurate particulars.
- The assessee's explanation regarding a discount from a party was not accepted by the AO.
- The Commissioner of Income Tax (Appeals) upheld the penalty, stating the assessee furnished inaccurate particulars.
- The Tribunal found the explanation reasonable and directed deletion of the penalty.

Issue 2: Failure to strike out inappropriate portions in the show-cause notice.
- The assessee argued that the penalty was levied without specific charges being mentioned in the notice.
- The assessing officer did not strike out inappropriate portions in the notice, leading to confusion.
- The Tribunal referred to relevant case laws but ultimately focused on the merit of the case.

Issue 3: Merits of the case and justification for penalty imposition.
- The AO imposed the penalty for furnishing inaccurate particulars and concealing income.
- The assessee contended that the addition was due to an unintentional mistake by the accountant.
- The Tribunal accepted the assessee's explanation, noting no intentional evasion and the absence of tax liability due to losses.
- Various case laws were cited to support the contention that no concealment or inaccurate particulars were intended.

Conclusion:
The Tribunal allowed the appeal, directing the deletion of the penalty under section 271(1)(c) based on the reasonable explanation provided by the assessee and the absence of deliberate evasion or concealment. The decision was announced on 26th July 2021.