2018 (3) TMI 535 - HC - Income Tax

Penalty u/s 271(1)(c) - addition on account of bad debts - Held that - We set aside the impugned order of the Tribunal dated 2nd September, 2014 and restore the issue to the Tribunal for fresh consideration keeping in view the decision of our Court in M/s. Shree Gopal Housing & Plantation Corporation (2018 (2) TMI 604 - BOMBAY HIGH COURT) and also considering the respondent-assessee s submission that no penalty is imposable under Section 271(1)(c) of the Act as no inaccurate particulars of income had been filed by the respondent in the present case.

Summary

Issues:
Challenge to order under Section 260-A of the Income Tax Act, 1961 for Assessment Year 2005-06 - Deletion of penalty under Section 271(1)(c) attributable to bad debts - Whether penalty justified for inaccurate particulars of income - Fresh consideration by Tribunal.

Analysis:
The appeal challenges the order of the Income Tax Appellate Tribunal (the Tribunal) dated 2nd September, 2014, regarding the Assessment Year 2005-06 under Section 260-A of the Income Tax Act, 1961. The main issue raised by the Revenue is the deletion of penalty under Section 271(1)(c) of the Act attributable to bad debts. The Tribunal had relied on a decision to hold that once an appeal is admitted in quantum proceedings, no penalty under the Act is sustainable, considering it as evidence of the issue being debatable. However, a subsequent decision by the Court emphasized that the deletion of penalty should be decided on a case-to-case basis, not solely based on the admission of an appeal in quantum proceedings.

The respondent's counsel argued that all income particulars were disclosed, justifying that the penalty for filing inaccurate particulars of income under Section 271(1)(c) of the Act was not warranted in the present circumstances. The Court acknowledged this argument but noted that since the appeal was allowed on a legal issue, the specific issue of inaccurate particulars was not addressed before the Tribunal. Consequently, the Court set aside the Tribunal's order and remanded the issue for fresh consideration, taking into account the decision in a related case and the respondent's submission regarding the inapplicability of the penalty provision in this case.

In conclusion, the Court answered the reframed question of law in favor of the Revenue and against the respondent, indicating that the issue required fresh consideration by the Tribunal. The appeal was disposed of accordingly, with no order as to costs.