2022 (2) TMI 1031 - AT - Income Tax

Penalty u/s 271(1)(c) - Taxability of ALV - HELD THAT - Taxability of ALV was highly debatable and, in fact, right from Assessment Year 1998-99 and till such time, while the Assessing Officer was making similar additions, the ld. CIT(A) and the Tribunal were consistently deleting the same year after year. It is not in dispute that it is only by order dated 31.10.2012 2012 (11) TMI 323 - DELHI HIGH COURT the Hon'ble High Court of Delhi decided the issue against the assessee. It is equally true that SLP of the assessee is pending before the Hon'ble Supreme Court. Past history of the assessee clearly shows that taxability of ALV in respect of vacant commercial/self-occupied assets was a highly debatable issue and two views were possible. Since the assessee has taken a plausible view, the same cannot be considered as filing of inaccurate particulars of income or concealment of particulars of income. Therefore, we do not find any error or infirmity in the findings of the ld. CIT(A). Ground No. 1 is accordingly dismissed. Defective notice - Notice issued by the Assessing Officer u/s 274 r.w.s 271(1)(c) of the Act to be bad in law as it did not specify which limb of section 271(1)(c) of the Act the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income. The issue was decided in favour of the assessee - See SSA Emerald Meadows 2015 (11) TMI 1620 - KARNATAKA HIGH COURT

Summary

Issues:
1. Deletion of penalty imposed under section 271(1)(c) of the Income Tax Act.
2. Validity of penalty proceedings initiated by the Assessing Officer.

Detailed Analysis:
1. Deletion of Penalty:
The appeal before the Appellate Tribunal ITAT Delhi involved the deletion of a penalty amounting to ?1,71,40,000 imposed by the Assessing Officer under section 271(1)(c) of the Income Tax Act. The Commissioner of Income Tax (Appeals) had deleted the penalty after considering the facts and submissions. The appellant contended that the taxability of ALV (actual letting value) was a highly debatable issue, and the assessee had taken a plausible view, which should not be considered as concealment of income or furnishing inaccurate particulars of income. The Tribunal noted that historically, the Assessing Officer, CIT(A), and Tribunal had been inconsistent in their treatment of ALV, with the High Court deciding against the assessee only in 2012, while the SLP was pending before the Supreme Court. The Tribunal agreed with the CIT(A) that since the assessee had taken a plausible view, there was no concealment of income, leading to the dismissal of Ground No. 1.

2. Validity of Penalty Proceedings:
The second issue revolved around the validity of the penalty proceedings initiated by the Assessing Officer. The appellant challenged the penalty on the grounds that the notice did not specify under which limb of section 271(1)(c) the penalty was leviable. Citing relevant case law, the Tribunal upheld that a notice failing to specify the exact limb of the section under which penalty proceedings were initiated would be bad in law. The Tribunal referred to decisions by the High Courts of Delhi and Karnataka, emphasizing the importance of clearly specifying whether the penalty was for concealment of particulars of income or furnishing inaccurate particulars of income. In line with these precedents, the Tribunal dismissed Ground No. 2, affirming the dismissal of the appeal and upholding the deletion of the penalty.

In conclusion, the Appellate Tribunal ITAT Delhi dismissed the appeal of the Revenue, confirming the deletion of the penalty and emphasizing the importance of clarity in specifying the grounds for initiating penalty proceedings under section 271(1)(c) of the Income Tax Act.