2024 (12) TMI 1168 - AT - Income Tax

Penalty u/s 271(1)(c) - addition being difference in stock - HELD THAT - Notice u/s 274 r.w.s. 271(1)(c) has not expressed under which limb the penalty is initiated under Section 271(1)(c) of the Act. The decision in the case of Manjunatha Cotton Ginning Factory 2013 (7) TMI 620 - KARNATAKA HIGH COURT is applicable in the present case. Besides this, the assessee has rightly submitted the closing stock details as well as the stock difference was also reflected in the audited accounts and there was no case built up by the Revenue that the assessee has filed inaccurate particulars of income or concealment of income. Thus, AO as well as the CIT(A) was not right in imposing the penalty. Appeal of the assessee is allowed.

Summary

Issues:
Penalty imposition under Section 271(1)(c) for stock difference, sundry creditors, and non-deduction of TDS.

Analysis:
The appeal was filed against the CIT(A)'s order upholding the penalty imposed under Section 271(1)(c) for various additions made during the assessment. The Assessing Officer had added amounts for stock difference, lump sum addition of sundry creditors, and non-deduction of TDS. The penalty was imposed without considering the submissions made by the assessee in response to the penalty notice. The grounds of appeal included contentions regarding the alleged furnishing of inaccurate particulars and concealment of income.

The CIT(A) partly allowed the appeal, leading to further challenge by the assessee. The argument put forth was that there was no discrepancy in the books of account regarding the stock difference, and the penalty was unjustified. The assessee contended that the penalty notice did not specify the particular limb of Section 271(1)(c) under which the penalty was initiated. Reference was made to legal precedents to support the argument that there was no intention to evade tax liability and that the details provided were accurate.

During the proceedings, both the Assessing Officer and the CIT(A) were criticized for imposing the penalty without sufficient grounds. The notice initiating the penalty did not specify the basis for the penalty under Section 271(1)(c). The appellate tribunal referred to legal judgments to support the decision that there was no case of inaccurate particulars or concealment of income by the assessee. The closing stock details were accurately presented in the audited accounts, and the stock difference was adequately explained, leading to the conclusion that the penalty imposition was unwarranted.

Ultimately, the appeal of the assessee was allowed, indicating that the penalty imposed under Section 271(1)(c) for the stock difference and other additions was not justified. The decision was based on the lack of evidence supporting the imposition of the penalty and the accurate disclosure of relevant details by the assessee.

Order pronounced in the open Court on this 19th December, 2024.