2024 (6) TMI 326 - AT - Income Tax

Penalty levied u/s 271(1)(c) - Inaccurate particulars of Income - Assessee had not made suo-moto submission regarding non-eligibility of brought forward loss either in its Return of Income or before the Assessing Officer as well as on the ground that assessee was not eligible to claim brought forward losses and accordingly furnished inaccurate particulars of Income Whether the Assessee had furnished inaccurate particulars of his Income specially when the Order giving effect (OGE) to MAP Order for the Asst. year 2012-13 was received by the Assessee after the date of filing the revised return for the Asst. year 2016-17 was barred by time and thereafter the Assessee had voluntarily paid the additional Tax liability for the Asst. year 2016-17 even before the issuance of Notice for Assessment Proceedings ? - HELD THAT - As the Assessee Company had paid the additional Taxes along with the Interest suo motto on 30/05/2018 itself i.e. way before the issuing first notice u/s. 143(2) of Assessment hearing, the plea of the revenue that had the AO not issued the notice u/s. 142(1) dated 10/12/2018 the assessee would not have admitted the set off of brought forward losses is not at all tenable. With regard to the claim of the revenue that had the AO not issued the Notice u/s. 142(1) dated 10/12/2018 the Assessee would have got the Refund is also not tenable as the Assessee Company had already paid the additional taxes along with the Interest suo motto on 30/05/2018 under minor head Tax on Regular Assessment (400) after the preparation of revised computation way before the issuance of Notice u/s. 143(2) for the Asst year 2016-17. The Assessing Officer did not bring any material on record that the explanation given was not bonafide. We are in complete agreement with the CIT(Appeals) that the original return for year under consideration was filed on 30/11/2016 the revised return was filed on 25/05/2017 which are not in dispute therefore the underlying additions/disallowance for levy of impugned penalty was not w.r.t concealment of Income or furnishing of inaccurate particulars of income at the time of filing the return of income for the year under consideration. We are also in agreement with the CIT(A) that had the case of the Assessee appellant not been selected for scrutiny for the year under consideration then it needs to be appreciated that there was no medium available to the assessee-appellant to make any such claim of refund as has been observed by the AO Ground No. 1 of the Revenue is unsustainable and accordingly stands dismissed. Non reporting of revised entitlement of set off of brought forward losses in consequent to order giving effect (OGE) to MAP resolution by Assessee suo-motto amounts to furnishing inaccurate particulars of Income - We are of the opinion that everything would depend upon the Return of Income filed because that is the only document where the assessee can furnish the particulars of its Income. When such particulars are found to be inaccurate, the liability would arise. Disallowance has arisen owing/consequent to the passing of the Order dated 10/05/2018 by the Ld. AO giving effect to the MAP Resolution in Assessee s case for Asst. Year 2012-13 which resulted in change in the loss carried forward for set off in the subsequent years including the Present Asst. Year 2016-17. Therefore we are of the opinion that the underlying additions/disallowances for levy of impugned penalty was not with respect to furnishing inaccurate particulars of income at the time of filing of the return for the year under consideration. It goes without saying that for applicability of section 271(1)(c), the conditions u/s 271(1)(c) must exist before the penalty is imposed. Therefore this ground of the Revenue also fails. In our Opinion in the present case merely because the Assessment Order was passed on the basis of Addition/Disallowances the Assessee agreed to the Addition already paid the Taxes along with the Interest way before the initiation of the Assessment Proceedings , it could not be inferred that the Assessee has furnished inaccurate particulars of Income . Moreover the Assessee Company had offered an explanation. The explanation was also not found to be false. On the contrary it was held to be bona fide. Therefore the AO can t resort to the levy of Penalty u/s. 271(1)(c). Decided in favour of assessee.

Summary

Issues Involved:
1. Deletion of penalty levied u/s 271(1)(c) of the Income Tax Act, 1961.
2. Non-reporting of revised entitlement of set off of brought forward losses.

Summary:

Issue 1: Deletion of Penalty Levied u/s 271(1)(c)

The Revenue appealed against the order of the CIT(A) deleting the penalty of Rs. 1,78,30,779/- levied by the AO u/s 271(1)(c) for the Assessment Year 2016-17. The facts leading to the penalty involved the Assessee filing a revised return on 25.05.2017 due to changes in carried forward losses from rectification and MAP orders for AYs 2009-10 and 2011-12. After receiving another MAP order for AY 2012-13 on 10.05.2018, the Assessee prepared revised computations and paid additional tax of Rs. 96,39,172/- on 30.05.2018 but could not file another revised return as the time limit had lapsed on 31.03.2018. The AO, without considering the tax paid voluntarily, passed an order u/s 143(3) on 17.12.2018, making additions and initiating penalty proceedings for furnishing inaccurate particulars of income. The CIT(A) deleted the penalty, noting that the disallowance arose from the MAP order received after the time limit for filing a revised return had expired and that the Assessee had acted in a bona fide manner by paying the additional taxes voluntarily.

Issue 2: Non-reporting of Revised Entitlement of Set Off of Brought Forward Losses

The Revenue argued that the Assessee furnished inaccurate particulars by not reporting the revised entitlement of set off of brought forward losses. The Tribunal noted that the Assessee had filed a revised return on 25.05.2017 due to changes from rectification and MAP orders for AYs 2009-10 and 2011-12 and paid additional taxes voluntarily on 30.05.2018 after receiving the MAP order for AY 2012-13. The Tribunal found that the disallowance arose from the MAP order received after the statutory time limit for filing a revised return had expired, and the Assessee had acted in a bona fide manner. The Tribunal held that the conditions u/s 271(1)(c) must exist before imposing a penalty and that merely agreeing to the addition and paying taxes does not imply furnishing inaccurate particulars of income. The Tribunal confirmed the CIT(A)'s decision to delete the penalty.

Conclusion:

The appeal filed by the Revenue was dismissed, and the order of the CIT(A) deleting the penalty levied u/s 271(1)(c) was confirmed. The Tribunal found no infirmity in the CIT(A)'s decision, noting the Assessee's bona fide actions and voluntary payment of additional taxes. The order was pronounced in the open court on 29th May, 2024.