2015 (8) TMI 12 - AT - Income Tax

Penalty under section 271(1)(c) - Held that - In this case, the Assessing Officer has not brought out any specific charge for which the penalty has been imposed on the assessee u/s 271(1) (c) of the Act. He has not brought out whether the assessee has concealed the particulars of income or whether the assessee has furnished inaccurate particulars of income. In CIT v. Atul Mohan Bindal (2009 (8) TMI 44 - SUPREME COURT where Hon ble Supreme Court was considering the same provision, it observed that the Assessing Officer has to be satisfied that a person has concealed the particulars of his income or furnished inaccurate particulars of such income. Thus the satisfaction of the Assessing Officer about the concealment of particulars of income or furnishing of inaccurate particulars of such income is essential before levying any penalty u/s 271(1) (c). The Assessing Officer as is apparent from the penalty order has not satisfied about the concealment of particulars of income or furnishing of inaccurate particulars of income on the part of the assessee. On this basis itself the penalty deleted. - Decided in favour of assessee.

Summary

Issues:
Penalty imposition under section 271(1)(c) for concealment of income or furnishing inaccurate particulars of income.

Analysis:
1. The appeal was filed against the penalty imposed under section 271(1)(c) for the assessment year 2007-08. The assessee had made additional income disclosures for various assessment years due to a search and seizure operation. The penalty was imposed by the Assessing Officer, and the appeal was dismissed by the CIT(Appeals).

2. The Assessing Officer confirmed the penalty by calculating the tax sought to be evaded and imposed a penalty of Rs. 64,747. However, it is crucial for the penalty order to clearly state whether the penalty is for concealment of income or furnishing inaccurate particulars of income. Failure to specify the charge can render the penalty order invalid, as per legal precedents.

3. The provision of section 271(1)(c) allows for the levy of penalty for either concealment of income or furnishing inaccurate particulars of income. The Assessing Officer must establish the specific charge for which the penalty is imposed. In this case, the penalty order did not specify the charge, leading to the allowance of the appeal.

4. The Explanation 1 to section 271(1)(c) creates a deeming fiction for concealment of income, which is rebuttable. It shifts the burden of proof to the assessee in certain situations. However, this provision does not apply when the charge is furnishing inaccurate particulars of income. The penalty cannot be imposed without a clear finding of the specific charge.

5. The penalty order in this case did not specify whether the penalty was for concealment of income or furnishing inaccurate particulars of income. As per legal principles, the Assessing Officer must be satisfied about the specific charge before levying any penalty under section 271(1)(c). Since the charge was not clearly defined, the penalty was deleted, and the appeal was allowed.