2022 (2) TMI 522 - AT - Income Tax

Penalty u/s 271(1)(c) - difference in the receipt shown by the assessee and the payment/ receipt shown in Form-26AS on account of receipt - CIT(A) upheld the action of AO by taking view that no appeal was filed by the assessee against such addition - HELD THAT - We find that the assessee has no occasion to file appeal, when the assessee himself offered the difference of receipt during the assessment. On the submissions of the assessee, CIT(A) called remand report from the assessee. AO furnished his remand report vide his report dated 12.02.2020. The AO in his remand report submitted that the assessee has not entered bill number in the ledger account of Insecticide India Ltd in the books for AY 2014-15, and that the assessee not raised the issue of double taxation in AY 2014-15 - no appeal in quantum assessment is filed by the assessee in AY 2012-13. As already held that the assessee has no cause of action to file against the addition which was offered by them during the assessment. From the remand report of AO, we find that there is no express denial of AO that the same receipt is not considered and offered for taxation in AY 2014-15. When the assessee has inadvertently not included the said receipt and has already included in AY 2014-15, and has already been taxed twice, therefore, in peculiar facts of the case, the assessee cannot be treated as not guilty of penal action u/s 271(1)(c). Penalty on addition on reconciliation of accounts amongst the appellant and the vendor - We find merit in the submissions of the Ld. AR of the assessee that the addition in assessment was based only due to the difference of reconciliation. We further noted that the assessee had not claimed deduction of such expenses, thus, mere addition of such amount will not attract the penalty under section 271(1)(c). Hence, the A.O. is directed to delete the entire penalty. Thus, the grounds of appeal raised by the assessee are allowed.

Issues:
1. Confirmation of penalty under section 271(1)(c) on unaccounted receipt and unaccounted purchases.
2. Justification of penalty imposition by the Assessing Officer.
3. Consideration of additional evidence and submissions by the assessee.
4. Analysis of penalty imposition by the ld. CIT(A).
5. Arguments presented by both parties before the Tribunal.
6. Decision and reasoning of the Tribunal on the penalty imposition.

Issue 1: Confirmation of penalty under section 271(1)(c) on unaccounted receipt and unaccounted purchases:
The appeal by the assessee challenged the penalty imposed under section 271(1)(c) for unaccounted receipt and purchases. The Assessing Officer initiated penalty proceedings alongside the assessment order. The Assessing Officer added amounts for unaccounted receipt and purchases, leading to the penalty imposition. The ld. CIT(A) confirmed the penalty, stating that the assessee should have appealed against the additions during the quantum assessment if the amounts were accounted for in a subsequent year. The Tribunal analyzed the case, considering the submissions and remand report, and concluded that the assessee had already accounted for the disputed amounts in a different assessment year. Therefore, penal action under section 271(1)(c) was deemed unjustified.

Issue 2: Justification of penalty imposition by the Assessing Officer:
The Assessing Officer imposed penalties on the unaccounted receipt and purchases, asserting that discrepancies existed between the assessee's records and those in Form-26AS. The ld. CIT(A) supported the Assessing Officer's decision, emphasizing the lack of appeal by the assessee against the additions. However, the Tribunal found that the assessee had voluntarily disclosed the unaccounted receipt and had accounted for it in a different assessment year. As a result, the Tribunal deemed the penalty imposition unwarranted due to double taxation and lack of grounds for appeal against the additions.

Issue 3: Consideration of additional evidence and submissions by the assessee:
The assessee submitted detailed explanations and additional evidence to support their claims regarding the unaccounted receipt and purchases. The submissions included ledger copies and financial records to demonstrate the correct accounting treatment of the disputed amounts. The assessee argued that the penalty should not apply as the amounts were already taxed in a previous assessment year. The Tribunal considered these submissions and evidence in reaching its decision to overturn the penalty imposition.

Issue 4: Analysis of penalty imposition by the ld. CIT(A):
The ld. CIT(A) upheld the penalty imposed by the Assessing Officer based on the lack of appeal by the assessee against the additions during the quantum assessment. The ld. CIT(A) also noted the absence of a challenge regarding double taxation in a subsequent assessment year. However, the Tribunal disagreed with this reasoning and found that the penalty was unjustified due to the double taxation issue and the voluntary disclosure of the disputed amounts by the assessee.

Issue 5: Arguments presented by both parties before the Tribunal:
The authorized representative for the assessee argued that the disputed amounts were already accounted for in a different assessment year, leading to double taxation. The representative emphasized that penalty imposition was unwarranted in such circumstances. On the other hand, the Senior Departmental Representative supported the lower authorities' decisions, emphasizing the lack of contest against the additions and failure to substantiate claims with evidence.

Issue 6: Decision and reasoning of the Tribunal on the penalty imposition:
The Tribunal, after considering all submissions, evidence, and the remand report, concluded that the penalty on the unaccounted receipt was unjustified due to double taxation. Additionally, the penalty on unaccounted purchases was deemed inappropriate as it was based on reconciliation differences and lacked a valid ground for penalty imposition. Consequently, the Tribunal directed the Assessing Officer to delete the entire penalty, allowing the grounds of appeal raised by the assessee.

This detailed analysis of the legal judgment provides insights into the issues raised, the arguments presented, and the Tribunal's decision on the penalty imposition in the case.

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