2024 (8) TMI 1426 - AT - Income Tax

Penalty u/s 271(1) - alleged willful furnishing of inaccurate particulars of sales tax concession - HELD THAT - There appears to have been no intent of the assessee to submit inaccurate particulars as alleged and the CIT(A) has sustained the penalty only on presumption that since the assessee is a big organization, the mistake could not have crept. We are of the considered view humans in all organizations are fallible to mistake and only because assessee happens to be an organization, a malice cannot be attributed. In fact, assessee reported correct facts at two places in the return at one place it left unreported. Thus, the findings of the CIT(A) to that extent deserves not to be sustained. Decided in favour of assessee.

Summary

Issues:
1. Penalty deletion on account of furnishing inaccurate particulars of income.
2. Penalty deletion on account of sales commission.
3. Penalty imposition for willful furnishing of inaccurate particulars of sales tax concession.

Detailed Analysis:
1. The appeal involved the deletion of penalties imposed on the Assessee by the Commissioner of Income Tax (Appeals) and the Additional Commissioner of Income Tax. The Tribunal upheld the deletion of penalties regarding alleged furnishing of inaccurate particulars of income related to cost-sharing arrangements and service charges, as these were previously deleted in other cases. The Tribunal also noted that the issue was debatable and penalties were deleted in previous years for similar reasons. The Tribunal found in favor of the Assessee, and the Revenue's appeal was dismissed.

2. The penalty deletion on account of sales commission was upheld by the Commissioner of Income Tax (Appeals) based on the Tribunal's decision and the High Court admitting the Assessee's appeal, indicating a debatable issue. The Deputy Registrar did not dispute these facts, leading to the penalty deletion being justified. The Tribunal dismissed the Revenue's appeal in this regard.

3. The penalty imposition for willful furnishing of inaccurate particulars of sales tax concession was based on the Assessee's failure to add back the provision for sales tax concession while computing taxable income. The Assessee claimed it was an inadvertent mistake, but the Assessing Officer (AO) imposed the penalty as the liability had not crystallized. The AO referred to a case law and held that the penalty was justified. However, the Tribunal found that there was no intent to submit inaccurate particulars and that human error could occur in organizations. Therefore, the penalty imposed by the AO was not sustained, and the Assessee's appeal was allowed while the Revenue's appeal was dismissed.

In conclusion, the Tribunal ruled in favor of the Assessee in all penalty-related issues, dismissing the Revenue's appeals and allowing the Assessee's appeal.