2019 (3) TMI 991 - AT - Income Tax

Penalty u/s 271(1)(c) - wrong claim of set off loss - scheme of amalgamation adopted - brought forward and carried forward loss - AO with the view that the assessee company was not liable to carry forward loss as per the provision of Section 72A(2) as amalgamation company was not in the business for a period of three years asked for explanation from the appellant - assessee thereafter suo moto withdrew the claim of the said amount and revised return was also filed - bonafide mistake - upon raising the query the assessee has withdrawn the wrong claim of set off loss - penalty deleted by CIT(A) - findings as no concealment of income or furnishing of inaccurate particulars - HELD THAT - assessee explained the situation to the best possible manner pleaded bonafide. Such explanation was not found false by the Learned AO. The materials relating to returned income was duly disclosed before the Learned AO. At that relevant point of time, there was no iota of evidence of concealment of any fact relating to particulars of income or furnishing of inaccurate particulars of income. Merely because the assessee had claimed the expenditure, which was not accepted or was not acceptable to the revenue, that by itself would not, attract the penalty u/s 271(1)(c) of the Act. In that view of the matter the penalty order was rightly deleted by the Learned CIT(A). - decided in favour of assessee.

Summary

Issues:

1. Appeal against penalty under section 271(1)(c) of the Income Tax Act, 1961.
2. Disallowance of brought forward loss and unabsorbed depreciation.
3. Assessment Year 2012-13.

Analysis:

Issue 1: Appeal against penalty under section 271(1)(c) of the Income Tax Act, 1961

The appeal was filed by the revenue against the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961. The penalty was levied on the basis that inaccurate particulars of income were furnished by the assessee. The contention was that the penalty was not sustainable as it was argued that there was no deliberate concealment of income, but only a disallowance of brought forward loss. The assessee maintained that all material facts were correctly submitted to the Assessing Officer (AO) and the claim of brought forward losses was subsequently withdrawn. The argument was supported by the order of the Commissioner of Income Tax (Appeals) (CIT(A)), which deleted the penalty. The Tribunal upheld the CIT(A)'s decision, stating that the penalty was not justified as there was no concealment of income, and the penalty order was rightly deleted.

Issue 2: Disallowance of brought forward loss and unabsorbed depreciation

The case involved the amalgamation of Vini Sales and Distributions Pvt. Ltd. (VSDPL) with the assessee company. The Assessing Officer disallowed the claim of brought forward loss and unabsorbed depreciation of VSDPL, leading to the initiation of penalty proceedings under section 271(1)(c) of the Act. The AO contended that the assessee furnished inaccurate particulars of income by claiming the losses of VSDPL. However, the Tribunal found that the claim was withdrawn by the assessee upon realizing the mistake, and it did not amount to tax evasion. The Tribunal held that the penalty was not justified as the claim was a bona fide mistake and was subsequently rectified. The Tribunal also noted that all particulars were disclosed to the AO, and there was no evidence of concealment of income.

Issue 3: Assessment Year 2012-13

The dispute arose from the assessment for the Assessment Year 2012-13, where the assessee initially declared a total loss, which was later revised. The penalty was imposed for furnishing inaccurate particulars of income related to the claim of brought forward losses and unabsorbed depreciation. The Tribunal, after considering all submissions and relevant materials, upheld the CIT(A)'s decision to delete the penalty, emphasizing that there was no deliberate concealment of income and the penalty order was rightly set aside.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the decision to delete the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 for the Assessment Year 2012-13.