2016 (3) TMI 533 - AT - Income Tax

Penalty u/s 271(1)(c) - Disallowance u/s 14A - Held that - It is pertinent to note that the assessee submitted audited balance sheet, P & L account, audit report and Form 3CD were duly filed during the assessment proceedings. There was no defect or deficiency was found or pointed out by the Assessing Officer in the books of account or in other documents, details or record filed by the assessee. During the course of penalty proceedings, the assessee voluntarily offered the amount of ₹ 17,09,920/- for disallowance under Rule 8D read with Section 14A of the Act out of the expenses actually incurred by the assessee. Thus, the assessee has not furnished any inaccurate particulars or claimed any bogus expenditure. The Assessing Officer as well as the CIT(A) was incorrect in holding that there was inaccurate particulars furnished by the assessee. - Decided in favour of assessee

Summary

Issues:
- Appeal against order passed by CIT (A) for Assessment Year 2009-10
- Disallowance of interest under Section 14A read with Rule 8D
- Penalty imposed under Section 271(1)(c) for inaccurate particulars of income

Analysis:
1. The appeal was filed against the order passed by CIT (A) for the Assessment Year 2009-10. The grounds of appeal included challenging the legality and factual basis of the CIT (A)'s order. The appellant specifically contested the penalty imposed under Section 271(1)(c) of the Income Tax Act.

2. The case involved the disallowance of interest under Section 14A read with Rule 8D. The Assessing Officer noted that the assessee firm had made investments in shares, the income from which, if received in the form of dividends, would be exempt. The assessee offered an amount for addition in its income, but the Assessing Officer initiated penalty proceedings under Section 271(1)(c) for allegedly furnishing inaccurate particulars of income.

3. During the penalty proceedings, the assessee contended that the disallowance was voluntary and not due to concealment of income. The assessee maintained proper books of accounts, which were audited and filed during assessment proceedings. Both the Assessing Officer and CIT (A) held that inaccurate particulars were furnished, leading to the penalty imposition.

4. The ITAT, after considering all records and arguments, found that the assessee had indeed offered the disallowance voluntarily and had not furnished inaccurate particulars or claimed false expenditures. The ITAT observed that the books of accounts were in order, and no defects were found during assessment. Consequently, the ITAT allowed the appeal of the assessee, disagreeing with the findings of the lower authorities.

5. In conclusion, the ITAT's judgment highlighted the importance of voluntary disclosure, proper maintenance of accounts, and the absence of inaccurate particulars in the case. The decision emphasized the need for a thorough examination of facts and adherence to legal provisions while imposing penalties under the Income Tax Act.