2016 (3) TMI 821 - AT - Income Tax

Penalty u/s 271(1)(c) - Held that - CIT (A) while confirming the penalty imposed by the Assessing Officer, has over looked the facts that the assessee has filed revised return when the assessee company itself came to the knowledge that there was an error in its return for A.Y 2003-04. The fact that company has at no stage hidden or intentionally acted which shows that they have deliberately filed the inaccurate, inadequate returns u/s 271(1)(c). If there is any inaccurate particulars of income furnished with intention then that has to be penalized but in present case, there was no such intention in the present case. The CIT (A) s finding that the assessee is guilty of furnishing inaccurate particulars of income is in appropriate as the Assessing Officer at any point of time has not scrutinized 2003-04 of the assessment on records and issued any notice before the filing of revised return. Thus, when the error was known to the assessee, the assessee itself has filed the revised return this act shows that it is not intentional furnishing of inaccurate particulars of income on behalf of the assessee. The case laws placed before us are also in support of the assessee s case. - Decided in favour of assessee

Summary

Issues:
1. Disallowance of expenses incurred by reimbursement of communication fees.
2. Penalty levied under section 271(1)(c) of the Income Tax Act, 1961.

Analysis:
1. Issue 1 - Disallowance of expenses incurred by reimbursement of communication fees:
The Appellate Tribunal ITAT DELHI heard two appeals, one by the Revenue (ITA No. 3052/Del/2011) and the other by the assessee (ITA No. 1755/Del/2012) against the order dated 6/5/2009 passed by Ld. CIT (A) IX, New Delhi for the A.Y 2003-04. The Revenue contended that the disallowance of expenses incurred by reimbursement of communication fees was erroneously deleted by the Ld. CIT(A). However, the ITAT upheld the decision, citing that the disallowance had been deleted in the quantum appeal, leading to no escapement of income and, therefore, no penalty should be levied. The ITAT found that the revenue's appeal did not sustain due to the quantum appeal decision against the revenue.

2. Issue 2 - Penalty levied under section 271(1)(c) of the Income Tax Act, 1961:
The Assessing Officer (A.O) levied a penalty under section 271(1)(c) of the Act alleging furnishing of inaccurate particulars of income. The assessee argued that there was a full disclosure on their part, and they had promptly filed a revised return upon discovering an error in the net profit for A.Y 2003-04. The ITAT observed that there was no deliberate intention to furnish inaccurate particulars of income, as evidenced by the assessee's actions. The ITAT found that the CIT (A) had overlooked crucial facts and case laws supporting the assessee's position. Consequently, the ITAT allowed the assessee's appeal and dismissed the Revenue's appeal, emphasizing the absence of intentional misconduct by the assessee.

In conclusion, the ITAT ruled in favor of the assessee, highlighting the absence of deliberate intention to furnish inaccurate particulars of income and the timely correction of errors. The judgment emphasized the importance of full disclosure and adherence to legal provisions in tax matters, ultimately leading to the allowance of the assessee's appeal and the dismissal of the Revenue's appeal.