2023 (8) TMI 639 - AT - Income Tax

Penalty u/s 271(1)(c) - wrong claim of loss of stock - HELD THAT - There is no findings of the authorities below that the claim of assessee was incorrect or false to allege that the assessee has either furnished incorrect particulars of income or has concealed particulars of income to alleged penalty provisions of section 271(1)(c) of the Act. We are unable to ignore the claim of loss of stock has not been disputed by the Sales Tax Department and no discrepancy has been pointed out by the Sales Tax Authorities to the claim of loss of stock. In the case of Reliance Petro 2010 (3) TMI 80 - SUPREME COURT held that merely because the claim of assessee was not accepted or not found to be acceptable by the tax authorities does not entitle the AO to impose penalty u/s 271(1)(c) - AO was imposing penalty has held that the penalty was leviable in the case of concealed income represents the returned loss. AO while imposing the penalty recorded findings that the penalty is being imposed for furnishing inaccurate particulars of income or concealed income which shows that even at the time of imposition of penalty the AO himself was not clear as to whether the assessee has furnished inaccurate particulars of income or has concealed particulars of income. CIT(A) while confirming part penalty alleged that there is no doubt that the income has been concealed. Thus we reached to a logical conclusion that the penalty imposed by the AO and confirmed by the ld CIT(A) on account of loss to stock is not sustainable - Decided in favour of assessee.

Summary

Issues:
The appeal against the order of the ld CIT(A) for AY 2009-10.

Summary:
The appellant, a defunct private limited company, faced penalty proceedings due to the AO's rejection of the claim of loss of stock. The AO imposed a penalty of Rs. 332255, which was partly confirmed by the ld CIT(A). The appellant contended that the penalty was unjustified as the claim of loss was not proven to be incorrect or false. The Sales Tax Department did not dispute the claim of loss, and the appellant could not claim insurance as the policies had expired. The Tribunal noted that the AO failed to establish that the appellant furnished inaccurate or concealed particulars of income. Relying on legal precedents, including the case of CIT Vs. Reliance Petroproducts Pvt. Ltd, the Tribunal held that the penalty was not sustainable. Consequently, the penalty was directed to be deleted, and the appeal of the assessee was allowed.
This summary provides a detailed overview of the issues involved in the legal judgment, the arguments presented by both parties, and the Tribunal's decision based on the facts and legal principles cited in the case.