2015 (9) TMI 57 - AT - Income Tax

Penalty levied under section 271(1)(c) - assessee had not offered this amount of ₹ 7,63,600 in its return of income filed under section 139(1) the assessee has concealed his particulars of income - Held that - Levy of penalty has to be clear as to the limb for which it is levied and the position being unclear penalty is not sustainable. Therefore, when the Assessing Officer proposes to invoke the first limb being conceal ment, then the notice has to be appropriately marked. Similar is the case for furnishing inaccurate particulars of income. The standard pro forma without striking of the relevant clauses will lead to an inference as to non-application of mind. Penalty proceedings having been initiated on the ground of furnishing inaccurate particulars of income , imposition of penalty on the ground of concealment of income was not justified. See K. M. Bhatia (Quarry) v. CIT reported in 1991 (7) TMI 56 - GUJARAT High Court - In the instant cases we have noticed that the Assessing Officer has initiated penalty proceedings under one default or limb of section 271(1)(c) of the Act, but levied for another default or limb of that section - Decided in favour of assessee.

Summary

Issues:
Validity of penalty orders under section 271(1)(c) of the Income-tax Act, 1961 for the assessment years 2003-04 to 2006-07.

Analysis:
The Appellate Tribunal considered the appeal against the penalty levied under section 271(1)(c) of the Income-tax Act, 1961 for the assessment years 2003-04 to 2006-07. The main contention raised was regarding the discrepancy between the initiation of penalty proceedings for concealment of income and the actual levy of penalty for furnishing inaccurate particulars of income. The Assessing Officer had initiated penalty proceedings for concealment of income but levied penalty for furnishing inaccurate particulars of income, which was challenged by the assessee. The Tribunal examined the legal grounds based on previous judgments and legal provisions. The Tribunal referred to the decision of the Gujarat High Court, which held that imposing penalty on a different ground than the one for which proceedings were initiated is not justified. The Tribunal also cited a case where penalty proceedings were initiated for furnishing inaccurate particulars of income but penalty was levied for concealment of income, leading to the penalty being deemed unsustainable. The Tribunal emphasized the importance of clarity in the grounds for penalty imposition and held that the penalty should align with the specific default or limb under section 271(1)(c) of the Act. Based on the legal precedents and the facts of the case, the Tribunal concluded that the penalty levied for all the assessment years under consideration was not sustainable due to the mismatch between the grounds for initiation and imposition of penalty. Consequently, the Tribunal set aside the penalty orders and directed the Assessing Officer to delete the penalties imposed under section 271(1)(c) for all the years in question. The appeals of the assessee were allowed, and the orders of the Commissioner of Income-tax (Appeals) were overturned.