2019 (10) TMI 605 - HC - Income Tax

Penalty u/s 271(1)(c) - HELD THAT - CIT (A) has set aside the penalty imposed upon the respondent assessee u/s 271(1)(c) while observing that the AO had not been able to establish either any concealment of material fact, or furnishing of inaccurate particulars by the assessee and the Tribunal has affirmed the said finding of the CIT (A). The order passed by the AO in the relevant proceedings does not disclose as to what is the concealment of material fact, or furnishing of inaccurate particulars in respect whereof the penalty is sought to be imposed on the assessee. Merely because additions made by the AO have been partially upheld by the CIT (A), would not confer the ground to initiate proceedings u/s 271(1)(c) of the Act of imposition of penalty, unless it is found that there is concealment of material facts, or furnishing of inaccurate particulars. No question of law.

Summary

Issues:
1. Appeal against order of Income Tax Appellate Tribunal setting aside penalty under Section 271(1)(c) of the Act.
2. Interpretation of the grounds for imposing penalty under Section 271(1)(c) of the Act.
3. Determination of concealment of material facts or furnishing inaccurate particulars for penalty imposition.

Analysis:
1. The High Court addressed the appeal filed by the Revenue against the order of the Income Tax Appellate Tribunal (ITAT) related to the assessment year 2010-11. The Tribunal had set aside the penalty imposed under Section 271(1)(c) of the Income Tax Act, as it found that the Assessing Officer failed to establish any concealment of material fact or furnishing of inaccurate particulars by the assessee. The Court noted that the Assessing Officer's order did not specify the grounds for imposing the penalty, and mere partial upholding of additions by the CIT (A) does not warrant penalty imposition unless there is clear evidence of concealment or furnishing inaccurate particulars.

2. The Court emphasized that the initiation of penalty proceedings under Section 271(1)(c) requires a finding of concealment of material facts or furnishing inaccurate particulars. In this case, since the Tribunal and CIT (A) did not find any such concealment or inaccuracy, the Court concluded that there was no legal basis for imposing the penalty. The Court highlighted that the grounds for penalty under the Act must be met, and mere disagreement on additions made by the Assessing Officer does not automatically lead to penalty imposition.

3. The High Court, after a thorough examination of the facts and legal provisions, dismissed the appeal filed by the Revenue. The Court held that the issue at hand was primarily factual, and no question of law arose from the Tribunal's decision. By affirming the Tribunal's findings that there was no concealment of material facts or furnishing of inaccurate particulars by the assessee, the Court upheld the decision to set aside the penalty under Section 271(1)(c) of the Income Tax Act. The judgment underscores the importance of establishing clear grounds for penalty imposition and the necessity of proving concealment or inaccuracy to justify such penalties under the Act.