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2019 (5) TMI 1375 - AT - Income TaxPenalty levied u/s 271(1)(c) - Lack of the specification of charge for the levy of penalty - treatment of interest on fixed deposit - assessee has adjusted the interest earned with the interest expenditure and thereafter adjusted the resultant figure with the WIP - bonafide conduct of assessee HELD THAT - The assessee s accounting was not totally unacceptable the same cannot lead to levy of penalty u/s. 271(1)(c). In this regard, Hon'ble Apex Court decision in the case of Reliance Petroproducts 2010 (3) TMI 80 - SUPREME COURT supports the case of the assessee. In this case it was held by Hon'ble Apex Court that if the Assessing Officer does not accept a claim of the assessee that will not ipso facto be a reason to initiate penalty proceedings. We note that assessee has agreed for the said treatment in the assessment proceedings. It is also the plea of the assessee that the said accounting treatment can be said to be an inadvertent error. In these circumstances also assessee deserves to succeed on the touchstone of Hon'ble Apex court decision in the case of Price Waterhouse Cooper 2012 (9) TMI 775 - SUPREME COURT Another limb of the assessee s plea is that Assessing Officer has mentioned that assessee has furnished inaccurate particulars of income in the assessment order. While in the penalty order Assessing Officer is not sure of the charge in as much as he has concluded that penalty has been levied for concealment of income or furnishing of inaccurate particular of income. In this view of the matter the assessee deserves to succeed on the touchstone of Hon'ble Jurisdictional High Court in the case of Samson Perinchery 2017 (1) TMI 1292 - BOMBAY HIGH COURT . CIT has erred in distinguishing this decision from the Jurisdictional High Court, on the facts of this case. In the background of aforesaid discussion and precedent we set aside the orders of the authorities below and delete the penalty. - Decided in favour of assessee.
Issues:
Challenge to confirmation of penalty under section 271(1)(c) on grounds of lack of specification of charge and merits of levy of penalty. Analysis: 1. The appeals by the assessee were directed against the order of the CIT-A confirming the penalty levied under section 271(1)(c) for various assessment years. 2. The assessing officer found that the assessee, a builder and developer, adjusted interest earned on fixed deposits with interest paid and included the resultant amount in work in progress, contrary to the decision in Tuticorin Alkali & Chemicals case. 3. The penalty was initiated without specifying the charge in the notice, and in the penalty order, it was mentioned as concealment of income or furnishing inaccurate particulars. 4. The assessee challenged the order before the CIT-A, who upheld the penalty. 5. The counsel argued that the penalty was bad in law due to lack of specificity in the charge and that the accounting treatment was not ex facie bad, citing relevant case laws. 6. The Tribunal noted that the dispute was regarding the treatment of interest on fixed deposits, with the assessing officer insisting it should be treated as income from other sources. 7. The Tribunal found the assessee's accounting treatment was not totally unacceptable, citing the Karnal Co-op. Sugar Mills case and Reliance Petroproducts case. 8. It was observed that the assessing officer's uncertainty in identifying the charge for penalty, along with the assessee's inadvertent error in accounting treatment, supported the assessee's case. 9. Referring to the Samson Perinchery case, the Tribunal held that the penalty should be deleted due to the assessing officer's ambiguity in specifying the charge. 10. Consequently, the Tribunal set aside the orders of the lower authorities and deleted the penalty, allowing the appeals by the assessee. This detailed analysis of the judgment highlights the key issues raised by the assessee regarding the penalty levied under section 271(1)(c) and the Tribunal's thorough examination of the legal and factual aspects leading to the decision to delete the penalty.
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