2022 (2) TMI 502 - HC - Income Tax

Penalty u/s 271(1)(c) - Whether non striking of the inaccurate portion by itself invalidates the notice? - unexplained purchase and sale - HELD THAT - We find that the CIT(A) rightly held that merely because a wrong claim was made by the assessee with regard to the expenses incurred for construction of a compound wall that by itself will not be a reason to impose penalty and accordingly vacated the penalty on the said head. With regard to the unexplained purchase and sale the CIT(A) took note of the explanation offered by the assessee and also the fact that the conduct of the assessee was not contumacious or wilful so as to impose penalty. Accordingly the penalty imposed on the said head was also vacated. When the matter travelled to the Tribunal the explanation which was given by the assessee and accepted by the CIT(A) was once again examined by the Tribunal and after noting several decisions as to under what circumstances penalty can be imposed under Section 271(1)(c) of the Act as also the fact that there was nothing on record to show that the assessee had purposely made a wrong claim confirmed the order passed by the CIT(A). Thus we find that there is no error committed by the CIT(A) or the Tribunal for us to interfere with the said order. Accordingly the appeal filed by the revenue is dismissed and the substantial questions of law are answered against the revenue.

Summary

Issues involved:
1. Delay in filing appeal under Section 260A of the Income Tax Act
2. Concealment of income and penalty imposition under Section 271(1)(c)

Issue 1: Delay in filing appeal under Section 260A of the Income Tax Act
The High Court addressed a delay of 621 days in filing an appeal under Section 260A of the Income Tax Act. The court noted that the appellant did not provide a sufficient explanation for the delay. However, considering the nature of the appeal and after both parties agreed to proceed with submissions on merits, the court exercised discretion and condoned the delay in filing the appeal.

Issue 2: Concealment of income and penalty imposition under Section 271(1)(c)
The case involved an appeal by the revenue against an order passed by the Income Tax Appellate Tribunal regarding concealment of income and penalty imposition under Section 271(1)(c) of the Income Tax Act. The assessing officer had concluded that there was concealment of income and wrong claims made by the assessee regarding expenses incurred for construction. The penalty proceedings were initiated, but the CIT(A) later deleted the penalty after considering the explanations provided by the assessee. The Tribunal upheld the CIT(A)'s decision, stating that there was no evidence of wilful misconduct by the assessee. The court found no errors in the decisions of the CIT(A) or the Tribunal and dismissed the appeal filed by the revenue, answering the substantial questions of law against the revenue.

In conclusion, the High Court addressed the delay in filing the appeal under Section 260A of the Income Tax Act and the issue of concealment of income leading to penalty imposition under Section 271(1)(c). The court exercised discretion to condone the delay in filing the appeal and upheld the decisions of the CIT(A) and the Tribunal regarding penalty imposition, finding no grounds for interference.