2022 (8) TMI 738 - AT - Income Tax

Penalty levied u/s.271(1)(c) - exemption u/s. 11 - HELD THAT - The quantum appeal itself is being allowed in favour of the assessee by granting exemption u/s. 11 of the Act, consequently penalty levied u/s. 271(1)(c) for concealment of income is liable to be deleted. Further more, the Ld. CIT(A) also as follows various case laws on the ground penalty cannot be levied on highly debatable issues of applicability of proviso to Section 271(1)(c). - Decided against revenue.

Summary

Issues:
1. Appeal against penalty levied under section 271(1)(c) of the Income Tax Act, 1961 for the Assessment Year 2012-13.
2. Appeal against penalty levied under section 271(1)(c) of the Income Tax Act, 1961 for the Assessment Year 2015-16.

Issue 1: Appeal against penalty for Assessment Year 2012-13:
The Appellate Tribunal ITAT Ahmedabad heard the appeal filed by the Revenue against the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 for the Assessment Year 2012-13. The case involved a local authority under the Gujarat Town Planning and Urban Development Act, 1976. The Assessing Officer disallowed certain exemptions and capital expenditure leading to a scrutiny assessment and subsequent penalty imposition for concealment of income. The Commissioner of Income Tax (Appeals) initially confirmed the penalty, but later deleted it based on a Co-ordinate Bench's decision and a High Court judgment granting exemption under section 11 of the Act. The Revenue challenged this deletion, arguing that the penalty should be upheld. The Tribunal, after considering various legal precedents, including the decision of the High Court, concluded that since the quantum appeal favoring the assessee was allowed, the penalty for concealment of income was unjustified. The Tribunal rejected the Revenue's grounds and dismissed the appeal.

Issue 2: Appeal against penalty for Assessment Year 2015-16:
In the appeal for the Assessment Year 2015-16, the Assessee challenged the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961. The Assessing Officer disallowed exemptions and capital expenditure, leading to a scrutiny assessment. The Commissioner of Income Tax (Appeals) partly allowed the appeal based on a previous ITAT decision favoring the assessee for the Assessment Year 2012-13. The Revenue raised several grounds of appeal, questioning the nature of the assessee's activities and the applicability of exemptions under section 11 and 12 of the Act. However, the Tribunal, considering the High Court's decision in a related matter, dismissed the Revenue's grounds and upheld the exemption granted to the assessee. The Tribunal rejected the Revenue's appeal, thereby dismissing it.

This detailed analysis of the legal judgment highlights the key issues, arguments presented, and the Tribunal's decisions for both appeals involving penalty levied under section 271(1)(c) of the Income Tax Act, 1961 for different Assessment Years.