2019 (1) TMI 648 - AT - Income Tax

Penalty u/s 271(1)(c) - assessment u/s 153A - Held that - It is pertinent to observe that the well settled proposition of law in such a situation would be that courts used to decide a dispute between the parties, because it involves decisions on facts. It can also involve decision on point of law. Both may have bearing on the ultimate result of decision. When a court interprets a provision, it decides as to what is the meaning of provision and effect of the words used by the legislature. It is a declaration regarding the statute. Judgment declares as to what is the legislative intent at the time of proclamation of law. The declaration is . This was the law, this is the law and this is how provision shall construe. Scope of section 153A has been explained in these four decisions therefore, it is incumbent upon us to take cognizance all these decisions and take note of additional legal point raised in appeal. If facts are being examined, then it would reveal that had the assessee challenged quantum addition, then that addition could have been deleted. But since the assessee has not challenged that does not mean that the AO has got jurisdiction to visit the assessee with penalty also. Once no incriminating material was found and time limit to issue notice u/s 143(2) had already expired, no action could have been taken against the assessee even in quantum. If no action could have been taken in the quantum proceedings, then how penalty which is to be computed on the basis of quantum addition could be levied upon the assessee ? Considering the above facts and circumstances, and in the light of the above four decisions, we are of the view that penalty is not sustainable in the case of the assessee. It is deleted. - Decided in favour of assessee.

Summary

Issues:
Challenge to penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 based on inaccurate particulars of income.

Analysis:
1. The assessee appealed against the penalty imposed by the AO under section 271(1)(c) of the Income Tax Act for the assessment year 2008-09. The AO found that the assessee incorrectly deducted income tax expenses and refunds from the total income, resulting in an addition of ?4,34,488. The penalty of ?1,53,420 was imposed for furnishing inaccurate particulars of income, which was confirmed by the ld.CIT(A).

2. The counsel for the assessee argued that the mistake was inadvertent and not deliberate, as the assessee wrongly claimed deductions due to a bona fide error. Additionally, it was contended that no incriminating material was found during the search under section 132, and the notice under section 153A was not issued within the prescribed time limit. The counsel relied on various judgments to support the defense.

3. The Revenue authorities contended that the deductions claimed were inadmissible, suggesting a deliberate attempt to claim undue benefits. It was argued that the assessee did not raise the second contention before the Revenue authorities, precluding her from doing so now.

4. The Tribunal considered the submissions and referred to the legal position established in the case law, particularly the scope of section 153A as explained by the Hon'ble Delhi High Court. The Tribunal highlighted that no incriminating material was found during the search, and the penalty was based on the quantum addition, which the assessee did not challenge.

5. Relying on the legal principles laid down in the judgments cited, the Tribunal concluded that since no incriminating material was found and the time limit for issuing a notice under section 143(2) had expired, the penalty was not sustainable. The Tribunal emphasized the independence of quantum and penalty proceedings, allowing the assessee's appeal and deleting the penalty.

6. The Tribunal's decision was based on the interpretation of the law post-assessment order, emphasizing that jurisdiction cannot be conferred based on the consent of the assessee. The Tribunal considered the subsequent judgments explaining the scope of section 153A and concluded that the penalty imposed on the assessee was not justified.

7. Ultimately, the Tribunal allowed the appeal of the assessee, stating that the penalty was not sustainable in the absence of incriminating material and within the context of the legal principles discussed. The penalty imposed under section 271(1)(c) was deleted, providing relief to the assessee.