2012 (7) TMI 275 - AT - Income Tax

Penalty u/s 271(1)(c)- reduction in loss on account of additions/ disallowances - Held that - Issue of claim of depreciation, penalty imposed under similar facts has been deleted by the ITAT in preceding year considering the claim of depreciation being a debatable issue, penalty cannot be imposed - in regard to LTCG on sale of investments and sale of vehicles all the relevant details were filed by the assessee along with the return of income and a change in claim of head of income cannot be considered as concealment or furnishing inaccurate particulars of income - in respect of PF and ESI only mistake committed by the assessee is in not giving proper effect to P&L A/c can be held to be of technical or venial in nature and not to concealing particulars of income or inaccurate particulars - for 43B disallowance assessee has given satisfactory explanation that revised return was prepared which was not filed by the Chartered Accountant due to dispute on payment of professional fees - no point of concealment or inarticulateness proved - in favour of assessee.

Issues:
- Appeal against penalty under section 271(1)(c) of the Income-tax Act, 1961.
- Disallowances and additions made by Assessing Officer.
- Legal issues regarding penalty initiation and justification.
- Claim of depreciation on plant & machinery.
- Claim of long term capital loss on sale of investments and vehicle.
- Disclosure of PF and ESI dues not deposited.
- Disallowance under section 43B.
- Assessing Officer's view on penalty imposition.
- Assessee's explanation and justification for penalty deletion.

Analysis:

1. The appeal was filed against the sustenance of a penalty of Rs. 2,13,75,229/- under section 271(1)(c) of the Income-tax Act, 1961, relating to the assessment year 2002-03. The Assessing Officer had initiated penalty proceedings based on various additions and disallowances made, which led to a reduction in the assessed loss of the assessee.

2. The assessee contended that the penalty should not have been imposed as there was proper disclosure of relevant facts. The claim of depreciation on plant & machinery was justified based on the readiness for use, and the penalty imposed was deleted by ITAT in a previous year under similar circumstances.

3. Regarding the claim of long term capital loss on the sale of investments and vehicle, the change in the head of loss from business to capital gain was considered a legal claim made by the assessee. The disclosure of PF and ESI dues not deposited was voluntary, and the disallowance under section 43B was explained by the preparation of a revised return not filed due to a dispute with the Chartered Accountant.

4. The Tribunal found that the explanations and justifications provided by the assessee were valid and not false or bogus. The penalty was deleted based on the proper disclosure of facts and the reliance on relevant legal precedents, including the judgment of the Hon'ble Supreme Court in the case of Reliance Petroproducts.

5. The Tribunal differentiated the present case from previous judgments cited by the Revenue, emphasizing the unique circumstances of the continuous loss-making concern and the technical nature of the penalty under section 271(1)(c). The appeal of the assessee was allowed, and the penalty was deleted.

6. The decision was pronounced in open court on 29-6-2012 by the ITAT, Delhi Bench, comprising Shri R.P. Tolani and Shri K.G. Bansal JJ.

This detailed analysis covers the legal issues involved in the judgment, including the specific arguments presented by the parties, the Tribunal's reasoning, and the final decision regarding the penalty under section 271(1)(c) of the Income-tax Act, 1961.

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