2019 (4) TMI 211 - AT - Income Tax

Penalty u/s 271(1)(c) - addition account of provision for retention and power cost and provision for liquidated damage - difference of opinion between the assessee and the assessing officer - No information given in the return was found to be incorrect or inaccurate - HELD THAT - AO while passing the assessment order made the addition account of provision for retention and power cost and provision for liquidated damage. The appeal filed by the assessee challenging the addition before CIT(A) was dismissed vide order dated 18.03.2011. No further appeal was filed before Tribunal. AO issued notice u/s 274 r.w.s. 271(1)(c) dated 07.12.2012. AO recorded that none appeared on behalf of the assessee nor any submissions was made. The Assessing Officer levied the penalty on both the disallowance @ 100% of the tax sought to be evaded vide his order dated 28.03.2013. There is no dispute that all the necessary facts and figures were disclosed by the assessee in its return of income. The return of income was accompanied the profit and loss account for the year, ended 31.03.2007, balance sheet as on 31.03.2007 and relevant schedules. No information given in the return was found to be incorrect or inaccurate, therefore, it could not be said that the provision made by assessee disallowed during the course of assessment proceedings was a result of any suppression of facts or deliberate concealment of income. No justification for imposing penalty when assessee had disclosed all the facts in the audited statement of accounts for the year under reference. There was no concealment of income at all. We are of the further view that it was just a clear cut case of difference of opinion between the assessee and the assessing officer. - Decided against revenue.

Summary

Issues Involved:
1. Legality of penalty under section 271(1)(c) of the Income Tax Act for Assessment Year 2007-08.
2. Justification for imposing penalty based on the assessee's disclosure of facts.
3. Validity of notice issued under section 274 read with section 271(1)(c).

Issue-wise Detailed Analysis:

1. Legality of Penalty under Section 271(1)(c) of the Income Tax Act for Assessment Year 2007-08:
The appeal by the revenue was against the order of the Commissioner of Income-tax (Appeals) [CIT(A)], which deleted the penalty levied by the Assessing Officer (AO) under section 271(1)(c) for Assessment Year 2007-08. The AO had imposed a penalty of ?1,04,58,890/- for furnishing inaccurate particulars of income and concealment of income related to provisions for retention and power cost amounting to ?2,80,72,176/- and provision for liquidated damage amounting to ?30,00,000/-. The CIT(A) deleted the penalty, holding that the assessee was under a bona fide belief about the allowability of the provisions made in its account and had disclosed all necessary facts and figures in its return of income.

2. Justification for Imposing Penalty Based on the Assessee's Disclosure of Facts:
The Tribunal found that the assessee had disclosed all necessary facts in its return of income, including the profit and loss account, balance sheet, and relevant schedules. No information given in the return was found to be incorrect or inaccurate, and the disallowance during the assessment proceedings was not due to any suppression of facts or deliberate concealment of income. The Tribunal agreed with the CIT(A) that there was no justification for imposing a penalty when all facts were disclosed in the audited statement of accounts. The Tribunal emphasized that the penalty provisions under section 271(1)(c) apply only when there is concealment of particulars of income or failure to disclose fully and truly particulars of income. The CIT(A) had relied on several judicial precedents, including the Supreme Court's decision in Reliance Petroproducts P. Ltd., which held that merely making a claim not maintainable in law does not amount to furnishing inaccurate particulars.

3. Validity of Notice Issued under Section 274 Read with Section 271(1)(c):
The assessee argued that the notice issued by the AO under section 274 read with section 271(1)(c) was invalid because it did not specify the limb of section 271(1)(c) on which the penalty was proposed. The AO had not struck out the inappropriate portion of the notice. However, the Tribunal did not find it necessary to discuss this issue in detail as it had already affirmed the CIT(A)'s order deleting the penalty on substantive grounds. The Tribunal noted that the assessee had participated in the penalty proceedings and had not raised an objection regarding the validity of the notice during those proceedings.

Conclusion:
The Tribunal affirmed the CIT(A)'s decision to delete the penalty imposed under section 271(1)(c) of the Income Tax Act, agreeing that the assessee had disclosed all necessary facts and there was no concealment of income. The appeal by the revenue was dismissed, and the issue regarding the validity of the notice under section 274 read with section 271(1)(c) was deemed academic and not discussed further. The order was pronounced in the open court on 29/03/2019.