2017 (6) TMI 490 - AT - Income Tax

Penalty u/s 271(1)(c) - MAT applicability - Held that - As already observed that in the present case the income of the assessee was charged under the MAT provisions and there is no doubt in this regard. Thus, there is no question for levying the penalty u/s 271(1)(c) for the additions made under the normal provisions of law. We are of the view that imposition of penalty cannot be sustained. The plea of the ld. Counsel for the assessee which is based on the decisions referred to in the earlier part of this order has to be accepted. We therefore hold that imposition of penalty in the present case cannot be sustained and the same is directed to be cancelled. - Decided against revenue

Summary

Issues:
Challenge to order imposing penalty under section 271(1)(c) of the Income Tax Act, 1961.

Analysis:
1. The Revenue challenged the order of the Commissioner of Income Tax (Appeals) confirming the penalty imposed on the assessee under section 271(1)(c) of the Income Tax Act, 1961.
2. The Assessing Officer initiated penalty proceedings due to the assessee's failure to declare capital gain income and unsupported deduction claimed under section 80JJA of the Act.
3. The penalty was imposed under section 271(1)(c) for furnishing inaccurate particulars of income, which was later deleted by the Commissioner of Income Tax (Appeals).
4. The assessee argued that since there was no tax liability under normal provisions of law and taxes were paid under Minimum Alternate Tax (MAT) provisions, penalty under section 271(1)(c) was not applicable.
5. The CBDT's circular clarified that penalty under section 271(1)(c) is not attracted where income tax payable under normal provisions is less than tax payable under MAT provisions.
6. The decision of the Hon'ble Delhi High Court in CIT vs. Nalwa Sons Investments Limited supported the position that penalty under section 271(1)(c) cannot be imposed if taxes are paid under MAT provisions.
7. The Supreme Court dismissed the Special Leave Petition filed against the Delhi High Court's decision, reinforcing the stance that penalty under section 271(1)(c) is not applicable in such cases.
8. The Appellate Tribunal held that since the income was charged under MAT provisions, the imposition of penalty under section 271(1)(c) for additions made under normal provisions was not justified.
9. Consequently, the Tribunal dismissed the Revenue's appeal, directing the cancellation of the penalty imposed by the Assessing Officer.

This detailed analysis of the judgment highlights the key issues, arguments presented, legal precedents cited, and the final decision of the Appellate Tribunal in dismissing the Revenue's appeal and canceling the penalty under section 271(1)(c) of the Income Tax Act, 1961.