2013 (1) TMI 97 - HC - Income Tax

Penalty u/s 271(1)(c) - Concealment of income - Evasion of Tax - Whether penalty u/s 271(1)(c) can be levied even when after disallowing certain sum while computing income as per the P&L account, the same had no impact on the tax liability of the assessee - Held that - It was held that even after such disallowance, tax finally required to be paid, as per Section 115 JB of the Act, would remain the same. It cannot be stated that the assessee evaded tax. In favour of assessee

Summary

Issues:
Appeal against Tribunal's judgment on penalty under Section 271(1)(c) of the Income-Tax Act, 1961.

Analysis:
The issue at hand pertains to the penalty imposed under Section 271(1)(c) of the Income-Tax Act, 1961. Both the Assessing Officer and the CIT(Appeals) found the respondent assessee liable for penalty due to concealment of income. The assessee then appealed to the Tribunal. The Tribunal, in its decision, revoked the penalty citing three main reasons. Firstly, it concluded that there was no concealment or provision of inaccurate particulars by the assessee, as all relevant facts were on record. Secondly, the Tribunal noted that even after certain adjustments in the profit and loss account, the tax liability of the assessee remained unaffected, as per Section 115 JB of the Act. Therefore, it was held that there was no tax evasion. The third ground for deleting the penalty was that the assessee's explanation to the Assessing Officer, provided in response to the notice, was deemed genuine and acceptable, with no indication of falsity. The Tribunal found no evidence to suggest that the assessee had not discussed all relevant facts related to income computation. Consequently, the Tribunal saw no merit in the Assessing Officer's or CIT(Appeals) case against the assessee.

Upon reviewing the facts, the Tribunal determined that the assessee had promptly disclosed all relevant information, and its explanation to the Assessing Officer was considered genuine and acceptable. Moreover, even after the adjustments made, there was no impact on the tax liability under Section 115JB of the Act. Consequently, the High Court found no fault in the Tribunal's decision and concluded that no substantial question of law arose from the case. As a result, the Tax Appeal was dismissed.