2024 (9) TMI 786 - AT - Income Tax

Penalty u/s 271(1) (c) - income determined in the OGE order giving effect - as argued AO has miscalculated the additions in the OGE and that the specific charge was not mentioned as to whether assessee had concealed its income or had furnished inaccurate particulars thereof - HELD THAT - It is seen that section 271(1)(c) of the Act clearly empowers an assessing officer to initiate penalty proceedings if in the course of any proceedings under this Act is satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars thereof. The law therefore mandates that there should be existence of any proceedings under the Act so as to give the AO the authority to initiate any penalty proceedings. With this understanding of the law, the Ld. AO was required to have issued penalty notice u/s 271(1) (c) of the Act on 13.12.2019 only. His issuance of notice u/s 271(1) (c) on 19.12.2019 therefore makes the penalty order dated 01.02.2022 invalid as it is not based upon any lawfully issued notice. Pertinently no proceedings were pending against the assessee on 19.12.2019 when the notice u/s 271(1)(c) was issued. We hold that the penalty order u/s 271(1)(c) is invalid and bad in law. The same is therefore quashed and set aside. Penalty u/s 271A - assessee failed to produce evidences that it had maintained its records etc as mandated in Rule-6F of IT rules - HELD THAT - Assessment order clearly stipulates that the AO had asked the assessee to submit evidences in respect of evidences maintained under Rule-6F and the same were not produced. During the course of hearing in this, assessee was asked as to whether the assessee has maintained books of accounts within the meanings of Rule-6F of IT rules r.w.s 44AA of the Act or not. The counsel confirmed that no books of accounts were maintained per Rule-6F of IT rules r.w.s 44AA - Section 271A of the Act clearly provides that penalty under the section shall be levied upon an assessee who fails to maintain its books of account and other documents as required u/s 44A r.w. Rule-6A of income tax rules. It further mandates that a penalty of Rs. 25000/- shall be levied for the impugned failure. The failure of the assessee in this case is amply demonstrated from the material on records. In view of the same we are of the view that penalty u/s 271A has been rightly imposed by AO in this case. Accordingly, the grounds of appeal raised by the assessee are dismissed.

Summary

Issues:
- Challenge to penalties imposed under sections 271(1)(c) and 271A for assessment years 2012-13 to 2016-17.

Detailed Analysis:

Penalty u/s 271(1)(c) for AY 2012-13 to 2016-17:
- The appeals were filed challenging penalties imposed under section 271(1)(c) for various assessment years.
- The original assessment order was passed on 13.12.2019, with the AO stating that the assessee concealed income, leading to penalty proceedings.
- The AO recalculated income following tribunal directions and imposed penalties on 01.02.2022.
- Assessee argued penalties were unjust due to incorrect calculations and lack of clarity on the charges.
- Tribunal found the penalties non-maintainable, as the penalty notices were issued after the assessment order, rendering them invalid.
- The AO lacked lawful jurisdiction due to the untimely penalty notice issuance, leading to the quashing of penalties.

Penalty u/s 271A for AY 2012-13 to 2016-17:
- The AO imposed penalties under section 271A for failure to maintain proper books of accounts.
- Assessee contested penalties citing lack of clarity on charges and providing all necessary details.
- Tribunal upheld the penalty under section 271A, as the assessee failed to maintain books of accounts as required by law.
- The penalty of Rs. 25,000 was justified under section 271A for non-compliance with Rule-6F of IT rules.
- The grounds of appeal challenging the penalty were dismissed, affirming the correctness of the penalty imposed.

Conclusion:
- The appeal against penalties under section 271(1)(c) for AY 2012-13 to 2016-17 was allowed due to invalid penalty notices.
- The appeal against penalties under section 271A for AY 2012-13 to 2016-17 was dismissed, upholding the penalty for failure to maintain proper books of accounts.
- The decision on penalties for subsequent assessment years mirrored the outcomes of the lead year appeals.
- The order was pronounced on 30th August 2024 in Chennai.