2021 (10) TMI 549 - AT - Income Tax

Penalty u/s. 271(1)(c) - unexplained cash credit u/s. 68 - assessee had furnished inaccurate particulars of income - HELD THAT - In the instant case, the assessee had indeed furnished all the relevant documents that are necessary for factual adjudication of the issue in dispute. It is only question of non-acceptance of the said evidence by the ld. AO due to astronomical increase in share price of the scrip dealt by the assessee which had eventually led to addition. The substantial question of law raised by the assessee on such addition has been admitted filed by the assessee. Once, the substantial question of law on the quantum proceedings is admitted by the Hon'ble High Court, the issue in dispute became debatable. Hence, there cannot be any concealment penalty of the assessee for alleged furnishing of inaccurate particulars of income. Reliance in this regard is placed on the decision of in the case of PCIT vs. Harsh International Pvt. Ltd. 2020 (12) TMI 1082 - DELHI HIGH COURT - Hence, we have no hesitation in directing the ld. AO to delete the penalty in the instant case. Accordingly, the ground raised by the assessee is allowed.

Summary

Issues:
Levy of penalty under section 271(1)(c) of the Income Tax Act, 1961.

Analysis:
The appeal in ITA No. 2970/Mum/2015 for A.Y. 2006-07 dealt with the imposition of penalty under section 271(1)(c) of the Income Tax Act, 1961. The primary issue was whether the ld. CIT(A) was justified in confirming the levy of penalty in the given circumstances. The assessee did not appear during the proceedings, and the notice sent was returned unserved. The ld. AO observed that the assessee received sale proceeds of shares resulting in long term capital gain, which was added as unexplained cash credit. The penalty proceedings were initiated for furnishing inaccurate particulars of income. Despite the assessee providing relevant documents to establish the genuineness of the share transactions, the ld. AO proceeded to levy a penalty of ?1,79,430 under section 271(1)(c) of the Act.

The Tribunal noted that the quantum appeal was confirmed by the Tribunal, and the assessee had appealed to the Jurisdictional High Court, which admitted the appeal. The Tribunal emphasized that once a question of law is admitted by the High Court, the issue becomes debatable, and there cannot be an allegation of furnishing inaccurate particulars of income. The Tribunal referred to the decision of the Hon'ble Delhi High Court in a similar case to support this stance. As the substantial question of law raised by the assessee was admitted by the High Court, the Tribunal directed the ld. AO to delete the penalty amount in the instant case, as the issue in dispute had become debatable.

In conclusion, the Tribunal allowed the appeal of the assessee, directing the ld. AO to delete the penalty of ?1,79,430 imposed under section 271(1)(c) of the Income Tax Act, 1961. The decision was based on the admission of the substantial question of law by the Jurisdictional High Court, making the issue debatable and negating the grounds for the penalty.