2015 (1) TMI 5 - AT - Income Tax

Penalty u/s 271(1)(c) - whether the CIT(A) is justified in deleting the penalty imposed u/s 271(1)(c) of the Act amounting to ₹ 4,37,711 - Held that - CIT(A) has made threadbare analysis of disallowance of expenditure made in the quantum assessment which had resulted in the imposition of penalty u/s 271(1)(c) of the Act and had come to a correct conclusion that two disallowance of expenditure is only an incorrect claim and does not amount to concealment of income. The conclusions /findings of the CIT(A) have not been dispelled by the revenue. The CIT(A) s reliance on the various case laws on the subject is apt to the facts of this case. The revenue in its grounds of appeal relied on the case of CIT vs. Rubber Udyog Vikas (P) Ltd. 2011 (2) TMI 858 - PUNJAB AND HARYANA HIGH COURT . This decision has been taken note of by CIT(A) at para 3.8 of the impugned order. The dictum laid down in case of Rubber Udyog Vikas (P) Ltd. is that incorrect claim would not tantamount to furnishing of inaccurate particulars unless it is established that assesee has acted with malafide intention. The decision relied on by the revenue is in no way helpful to the case of the revenue. - Deided against Revenue.

Summary

Issues:
- Justification of deleting penalty under section 271(1)(c) by CIT(A)

Analysis:
The judgment pertains to an appeal by the department against the CIT(A) order dated 21.6.2013 concerning the deletion of a penalty imposed under section 271(1)(c) of the Act amounting to Rs. 4,37,711 for the assessment year 2007-08. The primary issue before the tribunal was whether the CIT(A) was correct in deleting the penalty. The facts of the case revolve around the assessment completed by the AO, disallowing certain expenses which led to the penalty imposition. The CIT(A) deleted the penalty, emphasizing that there was no concealment when the assessee claimed deductible expenses that were later disallowed by the AO, citing the decision in CIT vs. Reliance Petro products Ltd. 230 CTR 320.

The department challenged the CIT(A)'s decision on grounds questioning the justification for deleting the penalty. The tribunal analyzed the case, noting that the disallowance of expenses did not amount to concealment of income, as clarified by the CIT(A). The tribunal highlighted that the CIT(A) had correctly interpreted the law and case precedents, indicating that an incorrect claim does not constitute inaccurate particulars unless there is evidence of malafide intent, referencing the case of CIT vs. Rubber Udyog Vikas (P) Ltd. 335 ITR 558. The tribunal found the CIT(A)'s order aligned with the law and dismissed the revenue's appeal, affirming the deletion of the penalty.

In conclusion, the tribunal upheld the CIT(A)'s decision to delete the penalty under section 271(1)(c), emphasizing that the disallowance of expenses did not signify concealment of income. The tribunal's analysis focused on the absence of malafide intent in the assessee's actions, in line with legal principles and relevant case law. The decision was pronounced in open court on 18.7.2014.