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2017 (5) TMI 574 - AT - Income TaxPenalty u/s 271(1)(c) - Held that - As far as the appeal for AY 2005-06 is concerned, it is clear that in the instant case it cannot be said that the assessee had withheld any relevant information regarding the receipts and income from the AO. The amounts added back by the AO were the amounts disclosed by the assessee itself. With regard to the provisions of section 271(1)(c ) of the Act pertaining to penalty, the Hon ble Apex Court has authoritatively laid down that making of a claim by the assessee which is not sustainable will not tantamount to furnishing inaccurate particulars. See CIT vs. Reliance Petroproducts Pvt. Ltd.(2010 (3) TMI 80 - SUPREME COURT ). As far as the appeal for AY 06-07 is concerned, the Ld. AR has raised a point that the penalty has been imposed on the wrong amount. However, this plea was not before the Ld. CIT (A). Further, the correct amount on which the penalty has to be imposed will have to be verified by the AO in terms of the submissions made by the Ld. AR before us. Therefore, without commenting on the merits of the imposition of penalty, we restore the issue to the file of the AO for considering the submissions of the assessee with regard to the quantum on which the penalty has to be worked out. Therefore, this appeal stands allowed for statistical purposes.
Issues Involved:
1. Penalty under section 271(1)(c) of the Income Tax Act, 1961 for AY 2005-2006. 2. Penalty under section 271(1)(c) of the Income Tax Act, 1961 for AY 2006-2007. Detailed Analysis: 1. Penalty under section 271(1)(c) of the Income Tax Act, 1961 for AY 2005-2006: The assessee company, engaged in the manufacturing of laminated pouch film and poly pouch film, faced a penalty of ?3,65,925/- under section 271(1)(c) of the Income Tax Act, 1961, confirmed by the Ld. CIT (Appeals). The penalty was imposed due to an addition of ?10 lakhs on account of shares allotted to M/s Jeevandhara Waters Private Limited, which did not appear in the shareholder company's annual accounts. The assessee did not appeal against this addition. The assessee argued that all requisite information was provided, and the initial onus was discharged. The penalty was challenged on the grounds that the assessment order did not specify whether the penalty was for concealing particulars of income or for furnishing inaccurate particulars of income. Reliance was placed on the decision of the Hon’ble Karnataka High Court in CIT vs. Manjunatha Cotton and Ginning Factory, which mandates specific grounds in the notice under section 274. The Ld. Departmental Representative countered that the addition under section 68 had attained finality as no appeal was filed. It was argued that the assessee disguised its own money as share capital, constituting a clear case of concealment. Citing the Hon’ble Delhi High Court's decision in CIT vs. HCIL Kalindee Arsspl, it was emphasized that the initial burden of proof was on the assessee. The Supreme Court's judgment in Mak Data Private Limited vs. CIT was also referenced, stating that the AO need not record satisfaction in a particular manner. Upon review, the Tribunal found that the assessee had not withheld any relevant information and that the amounts added by the AO were disclosed by the assessee itself. Citing the Supreme Court’s decision in CIT vs. Reliance Petroproducts Pvt. Ltd., it was concluded that making an unsustainable claim does not amount to furnishing inaccurate particulars. Consequently, the penalty for AY 2005-06 was deleted. 2. Penalty under section 271(1)(c) of the Income Tax Act, 1961 for AY 2006-2007: During a survey operation, a discrepancy of 18,082 kg in stock was found, leading to an addition of ?13,53,500/- to the assessee's income. A penalty of ?4,55,588/- was imposed under section 271(1)(c), confirmed by the Ld. CIT (Appeals). The assessee contended that the penalty was imposed on a wrong amount and that the addition was agreed upon to buy peace of mind. The Ld. Departmental Representative maintained that the quantum addition had attained finality and that the discrepancy indicated unreliable books of accounts. The Tribunal noted that the plea regarding the wrong amount was not raised before the Ld. CIT (A) and required verification by the AO. Thus, the issue was remanded to the AO to consider the correct quantum for penalty calculation. Conclusion: - I.T.A. No. 1212/Del/2012 (AY 2005-06): Penalty deleted, appeal allowed. - I.T.A. No. 1213/Del/2013 (AY 2006-07): Issue remanded to AO for verification, appeal allowed for statistical purposes. Order pronounced in the open court on 21.04.2017.
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