2021 (11) TMI 86 - AT - Income Tax

Penalty u/s. 271(1) (c) - HELD THAT - Revenue has not controverted the fact that the facts are identical as were in the Assessment Year 2010-11 and the penalty proceeding pertaining of this year was dropped. The assessee has placed on record the order of the Assessing Officer pertaining to the Assessment Year 2010-11 wherein, the Assessing Officer had himself dropped the penalty proceedings. Assessing Officer has not given any reason as to why he dropped the penalty in Assessment Year 2010-11 and sustained the imposition of penalty for Assessment Year 2009-10 under the same set of facts - As in the impugned penalty order, the Assessing Officer has stated that non-filing of appeal goes to demonstrate the acceptance by the assessee of furnishing/concealing of income -. This observation goes to demonstrate that the AO had not specified the charge, whether it was far furnishing of inaccurate particulars of income or concealment of income. Therefore, looking into the facts where the Assessing Officer under the same set of facts has dropped the penalty in Assessment Year 2010-11, therefore, the penalty in this year also cannot be sustained, hence, deleted. Grounds raised in the appeal are allowed.

Summary

Issues:
Imposition of penalty under section 271(1)(c) for a specific amount without basis, justification, or legal grounds.

Analysis:
The appeal was against the order of the CIT(A) relating to Assessment Year 2009-10, challenging the penalty imposed under section 271(1)(c) for a specific amount. The appellant contended that the penalty was unjustified as the assessing officer did not consider various facts before passing the order. The appellant argued that the addition leading to the penalty was based on expenditure noted in a notepad not belonging to them, with no evidence linking it to the appellant. Moreover, the assessing officer failed to specify whether the penalty was for concealment of income or furnishing inaccurate particulars, rendering the penalty baseless and unwarranted. The appellant sought the deletion of the penalty in full.

The assessment under section 153A(1) of the Income Tax Act was completed, and a penalty was imposed under section 271(1)(c) for a specific amount due to unaccounted receipt/expenditure based on a notepad found and seized from the appellant's premises. The CIT(A) upheld the penalty, leading to the appeal before the Tribunal.

During the appeal, the appellant argued that the addition leading to the penalty was unjustified as there was no material linking the expenditure to them, and the penalty was imposed without specifying the charge in the notice. The appellant highlighted that the assessing officer had dropped penalty proceedings for a similar issue in a different assessment year, indicating inconsistency in the penalty imposition. The appellant relied on a judgment to support their contention.

The Tribunal noted that the facts were identical in the previous assessment year where penalty proceedings were dropped by the assessing officer. The assessing officer's decision to impose a penalty in the current year without specifying the charge was deemed unjustified. The Tribunal observed that the non-filing of an appeal did not imply acceptance of concealing income, as stated by the assessing officer. Consequently, the Tribunal allowed the appeal, stating that the penalty could not be sustained and should be deleted.

In conclusion, the Tribunal allowed the appeal, finding the penalty imposition unjustified and inconsistent with the assessing officer's previous decision. The penalty was deleted, emphasizing the lack of specific charges and the absence of evidence linking the expenditure to the appellant.