2013 (10) TMI 787 - HC - Income Tax

Penalty u/s 271(1)(c) of the Income Tax Act Held that - In the instant case, there was no concealment on the part of the assessee as AO has not collected independent material. Bonafide and inadvertent mistake is genuine. In the instant case no attempt to concealment was made as per the ratio laid down in the case of Price Water vs. CIT, JT 2012 (9) TMI 775 - SUPREME COURT - To this effect, there is concurrent finding of both the appellate authorities and in the absence of any adverse material, no penalty for concealment to be levied Decided against the Revenue.

Summary

Issues involved:
Department's appeal against cancellation of penalty under Section 271(1)(c) of the Income Tax Act, 1961 by the Income Tax Appellate Tribunal.

Analysis:
The Department filed an appeal under Section 260A of the Income Tax Act, 1961 challenging the cancellation of penalty by the Income Tax Appellate Tribunal. The substantial question of law revolved around whether the Tribunal erred in law by canceling the penalty despite the assessee's incorrect claim of exemption under Section 10B of the Act. The case involved the assessment year where the assessee, engaged in software export business, claimed exemption but failed to bring back the entire amount to India as required. The Assessing Officer (AO) levied a penalty under Section 271(1)(c) for false exemption claim, which was later canceled by the CIT(A) and upheld by the Tribunal.

The Department contended that the penalty was justified as the assessee failed to bring back a significant amount to India within the extended period, leading to a false exemption claim. The Department argued that the assessee concealed income by not informing the AO about the uncollected sums from export sales. The Department emphasized that willful concealment is not a prerequisite for civil liability under the Act and sought restoration of the AO's order imposing the penalty.

On the other hand, the assessee's counsel justified the impugned order, stating that the details for the amount received in India were filed within the prescribed period. The counsel argued that the exemption claim was based on audited accounts and all relevant information was disclosed to the AO. The assessee maintained that the discrepancy in the claim was due to genuine reasons and not intentional concealment, citing case laws to support their position.

The High Court, after hearing both parties, found that the assessee had disclosed all relevant facts and the discrepancy in the claim was due to bona fide reasons. The Court noted that there was no malafide intention or concealment involved, as the uncollected sums were export income not approved by clients. The Court referred to previous judgments and concurred with the appellate authorities that no penalty was leviable in this case. The Court upheld the impugned order, concluding that there was no reason to interfere based on the facts and circumstances presented.

Therefore, the High Court dismissed the Department's appeal, ruling in favor of the assessee and sustaining the order passed by the appellate authority. The Court found no concealment on the part of the assessee and held that the penalty under Section 271(1)(c) was not applicable in this case, based on the furnished facts and relevant case laws cited.