2015 (8) TMI 840 - AT - Income Tax

Penalty u/s.271(1)(c)- addition made on account of cash credit/disallowance of expenditure claimed as revenue in nature - Held that - There is no dispute with regard to the addition was made on account of the expenditure claimed as revenue expenditure by the assessee which was treated as capital expenditure by the AO. The assessee has not concealed any particulars of income or furnished inaccurate particulars of income. The only difference in treatment of the particular of the expenditure. Therefore, in our considered view, the authorities below were not justified in confirming the penalty. Hence, in view of the case of CIT vs. Reliance Petroproducts (P) Ltd., 2010 (3) TMI 80 - SUPREME COURT we direct the AO to delete the penalty - Decided in favour of assessee. Penalty u/s.271(1)(c) - Disallowance in respect of the difference between in the Profit & Loss A/c. filed along with the original return and in the revised return - Held that - CIT(A) has observed that bills cropped up when additional income was detected. It is not the case of the Revenue that bills furnished before the AO were not genuine as there is no finding by the AO that these bills/vouchers were not genuine and no inquiry has been made at the end of the AO. Therefore, we are of the view that this is not the case were penalty deserves to be sustained. We therefore accordingly direct the AO to delete the penalty. As a result, ground raised by the assessee is allowed and appeal of the assessee for AY 2005- 06 is allowed. - Decided in favour of assessee. Penalty u/s.271(1)(c) - disallowance made u/s.40(a)(ia) - Held that - As relying on Commissioner of Income-tax-IV Versus LG Chaudhary 2013 (8) TMI 192 - GUJARAT HIGH COURT wherein held CIT(A) and ITAT have rightly deleted the penalty observing that the disallowance was due to non-payment of TDS, which was at the most a technical default. There being nothing to indicate any concealment of the income or furnishing of inaccurate particulars of income by the assessee, the Assessing Officer was rightly not justified in levying the penalty. - Decided in favour of assessee.

Summary

Issues Involved:
1. Confirmation of penalty levied under section 271(1)(c) of the Income Tax Act for AY 2004-05.
2. Confirmation of penalty levied under section 271(1)(c) of the Income Tax Act for AY 2005-06.
3. Confirmation of penalty levied under section 271(1)(c) of the Income Tax Act for AY 2006-07.

Issue-wise Detailed Analysis:

1. Confirmation of Penalty for AY 2004-05:
The Assessee contested the confirmation of penalties for AY 2004-05, specifically for the addition of Rs. 7,000 under section 68 (undisclosed cash credit) and Rs. 49,834 (disallowed as capital expenditure but claimed as revenue expenditure). The Assessee argued that all details were provided during assessment, and there was no concealment or furnishing of inaccurate particulars. The CIT(A) upheld the penalties, citing the Assessee's failure to provide sufficient evidence regarding the cash credit and the incorrect claim of capital expenditure as revenue expenditure. The Tribunal, however, found that the Assessee had filed a confirmation from the depositor and that the AO did not summon the depositor, thus directing the deletion of the penalty for the cash credit. For the capital expenditure, the Tribunal noted that the Assessee did not conceal particulars or furnish inaccurate particulars, and the issue was merely a difference in treatment. Consequently, the Tribunal directed the deletion of the penalty, relying on the Supreme Court's judgment in CIT vs. Reliance Petroproducts (P) Ltd.

2. Confirmation of Penalty for AY 2005-06:
For AY 2005-06, the Assessee appealed against the confirmation of a penalty of Rs. 24,600. The AO had made disallowances based on differences between the original and revised Profit & Loss accounts, which the Assessee attributed to genuine mistakes. The CIT(A) confirmed the penalty, doubting the Assessee's intentions and the authenticity of the bills provided. The Tribunal found no evidence that the bills were not genuine and noted that the AO did not conduct any inquiry into the authenticity of the bills. Therefore, the Tribunal directed the deletion of the penalty, emphasizing that the penalty was not warranted in this case.

3. Confirmation of Penalty for AY 2006-07:
For AY 2006-07, the Assessee challenged penalties on similar grounds as in previous years, including unexplained credits and disallowed expenditures. The Tribunal, maintaining consistency with its earlier findings, directed the deletion of penalties for cash credits and disallowed expenditures. Additionally, the Tribunal addressed the penalty for disallowance under section 40(a)(ia) for non-deduction of tax, amounting to Rs. 3,43,293. The Tribunal referred to the Gujarat High Court's decision in CIT-IV vs. L. G. Chaudhary, which held that disallowance due to non-payment of TDS was a technical default and did not indicate concealment or furnishing of inaccurate particulars. Therefore, the Tribunal directed the deletion of the penalty for this disallowance as well.

Conclusion:
The Tribunal allowed all three appeals of the Assessee, directing the deletion of penalties levied under section 271(1)(c) of the Income Tax Act for AY 2004-05, 2005-06, and 2006-07, based on the lack of concealment or furnishing of inaccurate particulars and the technical nature of the defaults. The Tribunal relied on relevant judicial precedents, including the Supreme Court's judgment in CIT vs. Reliance Petroproducts (P) Ltd. and the Gujarat High Court's decision in CIT-IV vs. L. G. Chaudhary.