2015 (3) TMI 62 - AT - Income Tax

Penalty u/s 271(1)(c) - Non inclusion of income from projects - Held that - Act of the assessee in not including income from the two projects in its total income is absolutely bona fide backed by proper Agreement with the Ministry of Tourism, Government of India and does not warrant imposition of any penalty u/s 271(1)(c). It is an altogether a different matter that the MOT, after making commitment to a non-resident assessee, could not seek exemption under the relevant provisions of the Act and the assessee completed the litigation by paying the taxes due on such income. Now, if, at all, there is some penalty liability, that should have been discharged by the MOT in terms of its Agreement with the assessee. Since we are only concerned with the imposition of penalty on such income, there can be no case under the present facts for imposing concealment penalty u/s 271(1)(c) on the assessee as there was a bona fide reason for not including such income in the total income. We, therefore, set aside the impugned order and order for the cancellation of penalty for all the years under consideration. - Decided in favour of assessee

Summary

Issues:
Appeals against penalty u/s 271(1)(c) for assessment years 1997-98 to 2002-03.

Analysis:
1. The Tribunal previously deleted the penalty, but the High Court remanded the matter due to the introduction of section 271(1B) of the Act.
2. The appeals proceeded ex parte as the assessee did not participate.
3. The insertion of section 271(1B) makes the recording of satisfaction by the AO irrelevant for penalty initiation.
4. The AO directed penalty proceedings in the assessment orders, justifying the penalty imposition.
5. The AO computed tax liabilities for various assessment years based on income from different projects.
6. The assessee argued that income from certain projects was exempt or to be borne by the Government.
7. The Tribunal found the assessee's non-inclusion of income from specific projects justified due to agreements with the Government.
8. The Tribunal held that the penalty under section 271(1)(c) was not justified due to the bona fide nature of the assessee's actions.
9. Citing precedents, the Tribunal emphasized the lack of intent to conceal income or provide inaccurate particulars.
10. The Tribunal set aside the penalty for all years under consideration, allowing all appeals.

This detailed analysis covers the issues involved in the legal judgment regarding penalty imposition under section 271(1)(c) for the mentioned assessment years, highlighting the Tribunal's decision to cancel the penalties based on the facts and legal precedents presented in the case.