2022 (8) TMI 1521 - AT - Income Tax

Penalty u/s 271(1)(c) - during the survey certain income was declared by the assessee and such declared income was also offered for taxation in the return of income - CIT(A) deleted penalty levy - HELD THAT - The penalty cannot be imposed in a methodological manner but it can only be imposed if it is required in the facts and circumstances of the case suggesting and confirming any concealment or furnishing of inaccurate particulars of income by the assessee. In the present case before us, the assessee has declared his income and has filed such declared income in his return of income. Therefore, there is true element of bonafideness in the conduct of the assessee. It cannot be spelt out in such circumstances that he has either concealed his income or has furnished inaccurate particulars of his income. What is to be seen in the instant case is whether declaration made by the assessee was bonafide and whether all the material facts relevant thereto have been furnished and we find that the assessee succeeds on this count since the declared income has been shown in the return of income and therefore the assessee cannot be held liable for penalty u/s 271(1)(c) - The revenue authorities have not been able to establish that the conduct of the assessee while declaring income and filing such declared income in the return of income was not bonafide or that any specific particulars were concealed or inaccurate particulars were furnished. Hon ble Supreme Court in CIT Vs. Reliance Petro products 2010 (3) TMI 80 - SUPREME COURT has held that no penalty should be imposed when the assessee adopts a bona fide view and has declared all the necessary particulars concerning the income in dispute. Since the view of the ld. CIT (A) is in accordance with the ratio laid down in the Reliance Petroproducts (supra), we endorse the same. Thus order of the CIT (A) in deleting the penalty cannot be faulted with - Decided in favour of assessee.

Summary

Issues involved:
1. Deletion of penalty under section 271(1)(c) of the Income-tax Act, 1961.

Detailed Analysis:
The appeal before the Appellate Tribunal ITAT Pune pertained to the deletion of penalty under section 271(1)(c) of the Income-tax Act, 1961, by the ld. Commissioner of Income Tax (Appeals)-8, Pune, for the Assessment Year 2013-14. The Revenue's grievance was specifically related to the penalty imposed on the declared income by the assessee, which was also offered for taxation in the return of income. The ld. D.R. contended that the penalty under section 271(1)(c) was not justified in this case as the income had been declared and filed in the return of income, resulting in no loss to the Revenue. The Tribunal observed that the assessment proceedings and penalty proceedings are distinct, as highlighted by the Hon’ble Supreme Court in previous cases. The criteria for imposing a penalty under section 271(1)(c) are different from those applied in making or confirming additions during assessment. Therefore, it was crucial to determine whether the addition or disallowance made in the quantum proceedings represented concealment by the assessee as required under section 271(1)(c) of the Act.

Furthermore, the Tribunal emphasized that the imposition of a penalty must be based on the facts and circumstances of each case, indicating concealment or furnishing of inaccurate particulars of income by the assessee. In the present case, since the assessee had declared and filed the income in the return of income, displaying a genuine intent, there was no basis to hold the assessee liable for penalty under section 271(1)(c). The authorities failed to establish that the assessee's conduct was not bona fide or that any specific particulars were concealed or inaccurately furnished. Citing the decision in CIT Vs. Reliance Petro products, the Tribunal reiterated that no penalty should be imposed when the assessee acts in good faith and discloses all necessary particulars regarding the income in question. Consequently, the Tribunal upheld the order of the CIT (A) in deleting the penalty, dismissing the grounds raised by the Revenue.

In conclusion, the Tribunal dismissed the appeal of the Revenue, affirming the decision to delete the penalty under section 271(1)(c) of the Income-tax Act, 1961. The judgment highlighted the importance of assessing the bonafide nature of the assessee's actions and the necessity for establishing concealment or inaccuracies before imposing penalties under the Act.