9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2012 (7) TMI 9 - AT - Income TaxPenalty under Section 271(1)(c) of the Income Tax Act - disallowance under Section 35D, reduction in exemption under Section 10B and rejection of claim under Section 80HHC Held that - Explanation-1 to Section 271(1)(c) gets attracted only when the assessee failed to substantiate its claim to explain or the explanation given by the assessee were found to be false. But when the explanation given by the assessee is simply not accepted by the Revenue, the same cannot be made a ground for levy of penalty. It is a case where the explanation offered by the assessee is not accepted but the same has not been found to be false by any of the authorities. Appeals of the Revenue are dismissed. Penalty in respect of enhancement of book profit - enhancement made by the CIT(A) in the quantum proceedings regarding book profit, but no penalty proceedings had been initiated on the enhancement of the book profit Held that - authority, which is adding the income, has to record a satisfaction to the effect that the penalty is required to be levied. In the absence of such satisfaction and any mention of initiation of penalty in the appellate order making enhancement in book profit, penalty is not leviable. No penalty is justified in respect of enhancement of book profit.
Issues Involved:
1. Deletion of penalty under Section 271(1)(c) of the Income Tax Act imposed by the Assessing Officer (AO). Issue-wise Detailed Analysis: 1. Deletion of Penalty under Section 271(1)(c) for Gujarat Ambuja Exports Ltd. (A.Y. 2003-2004): - The assessee filed a return declaring NIL income, but the AO assessed the book profit under Section 115JB at Rs. 4,71,16,061/-. The AO disallowed certain deductions and initiated penalty proceedings, imposing a penalty of Rs. 69,13,790/-. - The CIT(A) deleted the penalty, and the Revenue appealed. - The Tribunal noted that the CIT(A) deleted the penalty as there was no initiation of penalty proceedings on the enhancement of book profit by the CIT(A) in the quantum proceedings. The Tribunal upheld the CIT(A)'s decision, stating that without a recorded satisfaction for penalty, it cannot be levied. - Regarding disallowances under Sections 35D, 10B, and 80HHC, the Tribunal agreed with the CIT(A) that the assessee had made complete disclosures, and the explanation provided was not found to be false, thus no penalty was justified. 2. Deletion of Penalty under Section 271(1)(c) for Smt. Sulochana Gupta (A.Y. 1995-1996): - The assessee declared an income of Rs. 38,042/-, but the AO assessed it at Rs. 79,24,930/- after disallowing interest and making other additions. The AO imposed a penalty of Rs. 14,98,310/-. - The CIT(A) deleted the penalty, and the Revenue appealed. - The Tribunal noted that the CIT(A) deleted the penalty because the primary facts were disclosed by the assessee, and the explanation was not found to be false. The Tribunal upheld the CIT(A)'s decision, emphasizing that mere disallowance of a claim does not justify penalty if the explanation is not false. 3. Deletion of Penalty under Section 271(1)(c) for Shri Vijaykumar D. Gupta (A.Y. 1995-1996 and 1997-1998): - For A.Y. 1995-1996, the AO assessed the income at Rs. 1,72,11,640/- and imposed a penalty of Rs. 63,09,750/- after disallowing interest claims. For A.Y. 1997-1998, the AO assessed a net loss of Rs. 11,91,128/- and imposed a penalty of Rs. 14,31,300/-. - The CIT(A) deleted the penalties, and the Revenue appealed. - The Tribunal upheld the CIT(A)'s decision, noting that the disallowances were based on differences of opinion and the explanations provided by the assessee were not found to be false. The Tribunal referenced a similar case (M/s. Pramukh Oxygen Pvt. Ltd.) where penalties were deleted under similar circumstances. Common Observations: - In all cases, the Tribunal emphasized that penalties under Section 271(1)(c) are not justified when the assessee has made complete disclosures and the explanations provided are not found to be false. - The Tribunal referenced the Supreme Court decision in Reliance Petroproducts Pvt. Ltd., which held that mere disallowance of a claim does not attract penalty if the explanation is not false. - The Tribunal also noted that penalties are not justified when substantial questions of law are admitted by the High Court, as seen in the case of Rupam Mercantile Ltd. Conclusion: - The Tribunal dismissed all four appeals by the Revenue, upholding the CIT(A)'s decisions to delete the penalties imposed under Section 271(1)(c) of the Income Tax Act. The Tribunal reiterated that penalties are not warranted when the assessee's explanations are not found to be false and all necessary facts are disclosed.
|
