2018 (6) TMI 30 - AT - Income Tax

Initiation of penalty u/s 271(1)(c) - exemption u/s 54F claimed in excess - non specification of charge - Held that - Penalty was levied without mentioning the specific charge i.e whether on the grounds of concealment of income or furnishing of inaccurate particulars of income - thus following the case of SNITA TRANSPORT (P.) LTD. VERSUS. ASSISTANT COMMISSIONER OF INCOME-TAX 2012 (12) TMI 981 - HIGH COURT OF GUJARAT penalty u/s 271(1)(c) is not sustainable - Decided in favour of assessee.

Summary

Issues:
Challenge to penalty under section 271(1)(c) of the Income Tax Act, 1961 for excess exemption claimed under section 54F.

Detailed Analysis:

1. Background and Appeal Initiation:
The appeal was filed by the assessee against the penalty order passed under section 271(1)(c) of the Income Tax Act, 1961, for the Assessment Year 2010-11. The appellant challenged the penalty of ?1,37,734 levied for excess exemption claimed under section 54F.

2. Factual Overview:
The assessee had claimed an exemption under section 54F amounting to ?15,48,100, while only ?9,95,988 was eligible. Consequently, an addition of ?6,67,917 was made to the total income. The penalty proceedings were initiated by the Assessing Officer (AO) under section 271(1)(c) of the Act.

3. Arguments and Submissions:
The appellant contended that the error in claiming excess exemption was inadvertent and based on a genuine mistake regarding the applicable provision. The penalty was challenged on the grounds of no falsity in explanation, reliance on binding judgments, and lack of specific charges in the penalty order.

4. Legal Analysis and Decision:
The Tribunal noted that the penalty was imposed without specifying whether it was for concealment of income or furnishing inaccurate particulars, as required under section 271(1)(c). Citing the case law, the Tribunal held that a clear finding on the charge is essential for levying a penalty. As the AO failed to specify the charge, the penalty was deemed unsustainable.

5. Conclusion:
The Tribunal allowed the appeal, setting aside the penalty imposed by the AO and confirmed by the CIT (A) due to the lack of specific charges in the penalty order. Since the penalty was deleted on technical grounds, the Tribunal refrained from addressing the merits of the appeal.

In summary, the Tribunal ruled in favor of the assessee, overturning the penalty imposed for excess exemption claimed under section 54F due to the lack of specific charges mentioned in the penalty order, as required by law.