2018 (8) TMI 672 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - assessment u/s 153A - assessee withdrew the claim of deduction u/s. 54F of the Act during the course of assessment proceedings conducted u/s 153A r.w.s. 143(2)/143(3) of the 1961 Act, which ultimately led to the additions being made in the assessment order - Held that - Despite assessee offering an explanation that it was due to bonafide reasons as detailed below which enabled the assessee to have belief that assessee was entitled to claim of deduction u/s. 54F of the 1961 Act , none of the authorities below have verified the said contentions on the touchstone of accuracy of the said claim on facts as well on law. None of the authorities have gone into deliberations as to the merit of the claim of the assessee as to bonafide explanation and reasonable cause both on merits and on law as no findings/conclusions are amenable from the orders of the authorities below. The assessee is directed to produce all necessary evidences to prove that the averments made by it are correct to come to conclusion/belief that the assessee was entitled for deduction u/s 54F of the 1961 Act and it constituted bonafide explanation and reasonable cause to take it out of the penal provisions as are contained in Section 271(1)(c) of the 1961 Act read with Explanation 1. - Matter remanded back - appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
Penalty under section 271(1)(c) of the Income Tax Act, 1961 for furnishing inaccurate particulars of income.

Analysis:
The appeal was filed by the assessee against the penalty order passed by the Assessing Officer under section 271(1)(c) of the Income Tax Act for the assessment year 2010-11. The assessee claimed a deduction under section 54F of the Act in the revised return filed with the Revenue, which was later withdrawn during the assessment proceedings. The penalty was imposed by the AO for furnishing inaccurate particulars of income. The CIT(A) confirmed the penalty, leading the assessee to appeal before the tribunal.

The assessee contended that the claim for deduction under section 54F was made under a bonafide belief, citing reasons such as owning two residential flats and the redevelopment status of another property. However, the CIT(A) upheld the penalty without commenting on the explanation provided by the assessee. The tribunal considered the contentions of both parties and reviewed the material on record, noting that none of the authorities had verified the bonafide reasoning offered by the assessee. The tribunal observed that the authorities did not provide specific findings on the sustainability of the assessee's claim for deduction under section 54F.

The tribunal directed the matter to be remanded to the Assessing Officer for fresh adjudication on both factual and legal grounds. The AO was instructed to examine whether the reasons and explanations provided by the assessee constituted a bonafide belief and reasonable cause for claiming the deduction under section 54F. The assessee was directed to produce all necessary evidence to support its contentions. The tribunal emphasized that all contentions and issues were to be decided afresh by the AO, ensuring proper opportunity for the assessee to present its case in accordance with principles of natural justice.

In conclusion, the tribunal allowed the appeal of the assessee for statistical purposes, remanding the issue back to the AO for fresh consideration in accordance with the law. The tribunal clarified that it had not commented on the merits of the issue and kept all contentions open for the AO to adjudicate on merits. The appeal was allowed on 9th August 2018.