2024 (12) TMI 1543 - HC - Income Tax

Penalty order u/s. 271(1)(c) - involvement of organized tax evasion by way of accommodation entries - ITAT allowing the appeal of the assessee in respect of penalty order - HELD THAT - The legal position is very clear that the penalty proceedings are independent of the assessment proceedings and merely because the assessee has accepted the assessment order cannot be a ground to affirm the proposal of the AO to impose penalty. Thus factually the learned Tribunal found that the AO s conclusion was erroneous. Decided against revenue.

Summary

The High Court of Calcutta, presided over by Chief Justice T.S. Sivagnanam and Justice Hiranmay Bhattacharyya, reviewed an appeal filed by the revenue under Section 260A of the Income Tax Act, 1961. The appeal contested an order from the Income Tax Appellate Tribunal regarding a penalty under Section 271(1)(c) of the Act for the assessment year 2012-13. The revenue raised two substantial questions of law, questioning whether the Tribunal erred in allowing the assessee's appeal concerning the penalty order, given allegations of organized tax evasion and inaccurate income particulars.The Court focused on whether the Assessing Officer was justified in imposing the penalty. It was noted that the Tribunal found the Assessing Officer had not properly considered the assessee's contestations in the penalty proceedings, erroneously affirming the penalty based solely on the acceptance of the assessment order by the assessee. The Court reiterated that penalty proceedings are independent of assessment proceedings, and acceptance of an assessment order does not automatically justify a penalty. Consequently, the Court found no substantial questions of law to warrant consideration, leading to the dismissal of the appeal and the related stay application.