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- Justification of penalty under s. 271(1)(c) of the IT Act, 1961 - Reduction of penalty from 200% to 100% Analysis: Issue 1: Justification of Penalty under s. 271(1)(c) of the IT Act, 1961 The case involved a dispute regarding the claim of depreciation on imported cars by the assessee. The AO disallowed the claim based on specific provisions of the IT Act related to the use of motor cars for tourists. The CIT(A) upheld the AO's decision, stating that there was no evidence to prove that the cars were used solely for tourists, thus disallowing the depreciation claim. Subsequently, penalty proceedings were initiated under s. 271(1)(c) for furnishing inaccurate particulars of income. The AO held that the assessee's claim was false and intended to evade tax, leading to the imposition of a penalty. On appeal, the CIT(A) partly confirmed the penalty but reduced it from 200% to 100% of the tax sought to be evaded, considering the nature of the issue involved. Issue 2: Reduction of Penalty from 200% to 100% The assessee contended that there was no concealment of income as all details were provided to the AO. The explanation given was that the cars were used for both hire charges and airport duty for tourists. The Tribunal noted that the cars were mainly used for monthly hire charges rather than for tourists, as evidenced by the details of hire charges. It was observed that penalty proceedings require conscious concealment, and if the assessee acted honestly, no penalty should be imposed. Considering the facts and the explanation provided by the assessee, the Tribunal held that penalty was not justified and deleted the penalty imposed by the CIT(A). Consequently, the Revenue's appeal became infructuous and was dismissed. In conclusion, the Tribunal allowed the assessee's appeal and dismissed the Revenue's appeal, emphasizing the importance of conscious concealment for penalty imposition and the need for a thorough assessment of facts in penalty proceedings separate from assessment proceedings.
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