1992 (2) TMI 142 - AT - Income Tax

Summary

Issues:
1. Appeal against CIT(A) order on penalty under s. 271(1)(c)
2. Disallowance of deduction for interest paid to charitable trusts
3. Addition of foreign travel expenses as perquisite under s. 2(24)(iv)
4. Initiation of penalty proceedings under s. 271(1)(c)
5. Arguments before CIT(A) regarding penalty imposition
6. Arguments by Departmental Representative and counsel for the assessee
7. Tribunal's analysis and decision on penalty imposition

Analysis:

1. The appeal was filed by the Revenue against the CIT(A) order regarding the imposition of a penalty under section 271(1)(c) of the Income Tax Act. The CIT(A) had opined that a penalty was leviable on Rs. 20,000 out of Rs. 42,000 treated as a perquisite under section 2(24)(iv) of the IT Act.

2. The disallowance of deduction for interest paid to charitable trusts was a key issue. The Assessing Officer disallowed the claim for deduction due to the non-filing of relevant documents and evidence. This disallowance was upheld by the CIT(A) and the Tribunal. The death of the assessee hindered the submission of necessary documents.

3. Another issue was the addition of Rs. 42,000 as foreign travel expenses treated as a perquisite under section 2(24)(iv). The Assessing Officer initiated penalty proceedings under section 271(1)(c) based on these additions.

4. The Assessing Officer proceeded to levy a penalty of Rs. 48,550, equivalent to 100% of the tax sought to be evaded. The assessee challenged this penalty before the CIT(A).

5. During the appeal, the assessee argued that no penalty was exigible as no item was concealed or inaccurate particulars furnished. The CIT(A) considered these arguments and directed the Assessing Officer to recompute the penalty, taking into account Rs. 20,000 as the perquisite value.

6. The Departmental Representative supported the penalty order, citing lack of evidence and previous upholding of additions by the CIT(A) and Tribunal. The counsel for the assessee vehemently argued against the penalty imposition, highlighting past allowance of interest deductions and lack of mala fide intentions.

7. The Tribunal analyzed the submissions and material on record. It found no evidence of mala fide intentions or conscious concealment by the assessee. The Tribunal concluded that the penalty provisions were not applicable in this case and deleted the penalty imposed by the Assessing Officer.

In conclusion, the Tribunal dismissed the Revenue's appeal and allowed the cross objection by the assessee, deleting the penalty imposed under section 271(1)(c).