2024 (6) TMI 1019 - AT - Income Tax

Penalty u/s 271(1)(c) - assessee was employee and after the VRS received the salary and ex-gratia and declared the amount u/s 17(1) and claimed standard deduction u/s 16(1) - As per the revenue, if the salary plus exgratia was more than Rs. 5 lacs the assessee was not eligible to claim standard deduction u/s 16(1) - HELD THAT - The assessee was under a bonafide impression that since regular salary income was before Rs. 5 lakhs, the assessee was entitled to such deduction. It is also a fact that assessee filed the return without the assistance of advocate or counsel. There is no presumption that everybody knows the law. Therefore, there does not appear to be any malafide intention on the part of assessee for claiming standard deduction u/s 16(1) more so when the full facts in this regard were fully disclosed in the return and statement of income filed along with the return. Thus, we are of the considered opinion, the impugned appeal order is set aside and the impugned penalty levied by the ld. AO is quashed - Assessee appeal allowed.

Summary

Issues:
Appeal against penalty u/s 271(1)(c) of the Income Tax Act for A.Ys. 2001-02 & 2002-03.

Detailed Analysis:

1. Common Issue of Penalty:
A batch of appeals was filed against the CIT (A)'s order related to the penalty u/s 271(1)(c) of the Act for A.Ys. 2001-02 & 2002-03. The appeals were against the AO's order, and all the appeals were consolidated due to a common issue of penalty.

2. Lead Case - ITA No. 15/Asr/2004:
The lead case involved grounds challenging the imposition of a penalty of Rs. 7020 u/s 271(1)(c) of the Act. The appellant argued that there was no concealment or furnishing of inaccurate particulars of income, and the penalty was excessive.

3. Factual Background and Assessment:
The assessee, an employee, claimed standard deduction u/s 16(1) of the Act after receiving salary and ex-gratia post-VRS. The AO rejected the standard deduction claim, leading to penalty initiation u/s 271(1)(c) for furnishing inaccurate particulars of income amounting to Rs. 7020.

4. Argument and Precedents:
The appellant cited precedents favoring the assessee's position, emphasizing bonafide belief and full disclosure in the return. Previous ITAT decisions supported the appellant's contention, leading to a challenge against the penalty imposition.

5. Decision and Rationale:
After considering the arguments and relevant documents, the Tribunal found the issue to be squarely covered by a previous ITAT decision. Relying on the precedent, the Tribunal set aside the appeal order and quashed the penalty levied by the AO. All grounds challenging the penalty were allowed, leading to the allowance of all appeals.

6. Concluding Remarks:
The Tribunal's decision in ITA No. 15/Asr/2004 was applied mutatis mutandis to the other appeals, resulting in the allowance of all appeals against the penalty u/s 271(1)(c) for A.Ys. 2001-02 & 2002-03. The order was pronounced in open court on 11.01.2024, providing relief to the appellants against the penalty imposition.