2021 (11) TMI 211 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - Proof of concealment/furnishing of inaccurate particulars - employers contribution to ESI/PF disallowable u/s 43 B - HELD THAT - Addition stood disclosed in the tax audit report, interest on TDS income tax refund, and ESI /Income Tax penalty all stood duly disclosed by the assessee. It is just that while certain disallowances/additions, i.e. ESI PF and Interest on refund TDS and difference in interest receipts reflected in Form 26AS and that returned, were inadvertently missed to have been made by the assessee who surrendered the same when it was made aware during scrutiny assessment, the rest being minor penalty of ESI and interest on late payment of TDS, income tax and service tax penalty were contested as being compensatory and hence allowable but were subsequently offered for taxation. Considering the huge losses, the additions and disallowances inviting the levy of penalty amounting in all to ₹ 5,59,803/-, are too immaterial and coupled to it is the fact that a major portion of it relating to ESI/PF disallowed u/s 43B of the Act of ₹ 4,79,986/- had stood disclosed in the tax audit report as disallowable but was inadvertently left out while computing the income for the year. The same is clearly not liable to any penalty being squarely covered by the decision in the case of Price Waterhouse Coopers 2012 (9) TMI 775 - SUPREME COURT The remaining additions/disallowances of ₹ 79,817/- are pathetically immaterial and can be safely said to have been bonafidely mistakenly not disallowed/added back to the income of the assessee as claimed by it. We hold that no penalty u/s 271(1)(c) of the Act was leviable on account of additions made as listed above in our order and the order of the Ld.CIT(A), therefore, upholding levy of penalty is set aside - Decided in favour of assessee.

Summary

Issues involved:
- Appeal against order confirming penalty u/s 271(1)(c) of the Income Tax Act, 1961.
- Dispute over the imposition of penalty on various additions made by the Assessing Officer.
- Whether the assessee furnished inaccurate particulars or concealed income justifying the penalty.

Detailed Analysis:

Issue 1: Appeal against Penalty u/s 271(1)(c)
The assessee appealed against the order confirming the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961, for the assessment year 2013-14. The appeal challenged the decision of the Learned Commissioner of Income Tax (Appeals) relating to the levy of penalty.

Issue 2: Grounds Raised by the Assessee
The grounds raised by the assessee contested the imposition of penalty on various additions made by the Assessing Officer. These additions included discrepancies related to bonus, ex-gratia, interest on TDS, income tax penalty, difference in reconciliation of income, ESI penalty, and interest on refund not disclosed. The assessee argued that these discrepancies were either clerical errors, compensatory in nature, or due to inadvertent mistakes.

Issue 3: Arguments of the Assessee
The counsel for the assessee contended that all relevant particulars had been disclosed, and the additions were not a result of furnishing inaccurate particulars or concealing income. The counsel cited case laws to support the argument that penalty should not be levied if all income particulars are disclosed, even if certain claims are disallowed or not accepted.

Issue 4: Department's Position
The Department, represented by the Learned Commissioner of Income Tax (Appeals), argued that the assessee could not escape penalty by surrendering income after concealment was detected. It was emphasized that the responsibility to ensure accurate claims in the return rested with the assessee.

Issue 5: Tribunal's Decision
The Tribunal analyzed the case in light of section 271(1)(c) of the Act and relevant judicial interpretations. It noted that if all income particulars were disclosed, the mere disallowance of claims would not warrant a penalty. The Tribunal found that the additions in question were not a result of inaccurate particulars or concealment. The Tribunal considered the bonafide nature of the mistakes, the immateriality of the additions compared to the total losses, and the fact that most discrepancies were rectified during scrutiny assessment.

Conclusion
The Tribunal concluded that no penalty under section 271(1)(c) of the Act was justified based on the additions made by the Assessing Officer. Therefore, the Tribunal set aside the penalty upheld by the Learned Commissioner of Income Tax (Appeals) and directed the Assessing Officer to delete the penalty levied.

This detailed analysis covers the issues involved in the legal judgment, providing a comprehensive overview of the arguments presented, the Tribunal's decision, and the reasoning behind the final judgment.