2022 (10) TMI 610 - AT - Income Tax

Penalty u/s 271(1)(c) - whether the assessee-company has neither concealed the particulars nor furnished inaccurate particulars of Income? - HELD THAT - As in the instant case the assessee-company is following Percentage Completion Method and furnished the profit at 27.2% of the completed construction area, which has been accepted by the A.O. and made the addition in the impugned assessment year, on which, penalty proceedings were initiated. In this connection in the preceding A.Y. 2014-15 on similar set of facts, the A.O. has not levied any penalty, thereby, the A.O. satisfied that there was no concealment of the income on the part of the assessee-company. However, for the impugned A.Y. 2015- 16, when the assessee carried the matter in appeal before the CIT(A), CIT(A) simply confirmed the penalty levied by the A.O. under section 271(1)(c) without going into the merits of the case. It is a fact that in the assessment order the A.O. has accepted the profit arises out of Percentage Completion Method followed by the assessee at 27.2% and accepted the estimated profit on the said percentage at Rs.35 lakhs and made the impugned addition, on which, penalty proceedings were initiated by the A.O. Sr. D.R. did not controvert the submissions of the assessee that under identical facts and circumstances, the A.O. himself has dropped penalty proceedings u/s 271 (1)(c) of the I.T. Act, 1961 for the immediately preceding A.Y. 2014-15. Thus while considering the issue of imposing penalty under section 271(1)(c) of the Act, the A.O. cannot blow hot and cold in different assessment years on identical and similar facts and circumstances. Thus, penalty imposed by the A.O. and confirmed by the Ld. CIT(A) does not stand sustainable on this count. I, therefore, find force in the arguments of the Learned Counsel for the Assessee and in absence of any contrary material brought on record by the Ld. D.R to the effect that assessee concealed the particulars of income or furnished inaccurate particulars of income, set aside the orders of the authorities below and delete the penalty. Accordingly, appeal of the assessee is allowed.

Summary

Issues:
1. Condonation of delay in filing appeal before the Tribunal.
2. Imposition of penalty under section 271(1)(c) of the I.T. Act, 1961 for A.Y. 2015-2016.

Analysis:

Issue 1: Condonation of Delay
The appeal by the assessee was directed against the order of the Ld. CIT(A) for A.Y. 2015-2016, with a delay of 07 days. The Learned Counsel for the Assessee attributed the delay to obtaining Power of Attorney and requested condonation, emphasizing the fair chances of success in the appeal. The Ld. D.R. opposed the condonation. The Tribunal, after hearing both parties, found sufficient cause for the delay and condoned it, proceeding to decide the appeal on merits.

Issue 2: Imposition of Penalty
The assessee, engaged in real estate and construction, followed the Percentage Completion Method. The A.O. completed the original assessment for A.Y. 2015-2016, determining the total income of the assessee at Rs. 30,08,070 and initiated penalty proceedings under section 271(1)(c) of the I.T. Act, 1961, imposing a penalty of Rs. 8,78,990. The Ld. CIT(A) upheld the penalty. The Tribunal noted that the A.O. had accepted the profit calculated using the Percentage Completion Method for the preceding year without levying a penalty. In the absence of evidence of concealment or inaccurate particulars, the Tribunal set aside the penalty, emphasizing the inconsistency in the A.O.'s actions on similar facts in different assessment years. The appeal of the assessee was allowed, and the penalty was deleted.

In conclusion, the Tribunal allowed the appeal, setting aside the penalty imposed by the A.O. and confirmed by the Ld. CIT(A) for A.Y. 2015-2016, emphasizing the lack of evidence of concealment or inaccurate particulars and the inconsistency in the A.O.'s actions in different assessment years on similar facts.