2012 (11) TMI 1193 - AT - Income Tax

Assessee's Appeal Upheld, Penalty Deleted for Disallowance under Section 40(a)(ii)

M/s Devpras Institute Versus Income Tax Offfcer, Ward-2 (2), Baroda

The Tribunal allowed the assessee's appeal against the penalty imposed under section 271(1)(c) for disallowance under section 40(a)(ii) for the assessment ... - Issues involved: Appeal against penalty u/s 271(1)(c) of the Income Tax Act, 1961 for disallowance u/s 40(a)(ii) for the assessment year 2005-06.Background of the case:The assessee, engaged in the business of running a computer hardware training school, had its assessment finalized with a total income of &8377; 6,87,826/-, which was revised to &8377; 4,39,208/- after adjustments. A disallowance of &8377; 6,75,987/- u/s 40(a)(ii) led to the initiation and confirmation of penalty u/s 271(1)(c) for &8377; 46,107/-.Arguments and Decisions:During the hearing, the assessee's counsel cited a similar case where the penalty was deleted by the Hon'ble Co-ordinate Bench. The Bench, in the case of M/s. Lucky Star International, held that the penalty was not justified as there was no deliberate attempt to conceal income. The assessee relied on various decisions to support their case, emphasizing that the penalty was not warranted as there was no concealment or furnishing of inaccurate particulars of income.Judgment:After considering the submissions and legal precedents, the Tribunal found merit in the assessee's arguments. Citing the decision in the case of M/s. Lucky Star International, the Tribunal directed the Assessing Officer to delete the penalty. Consequently, the assessee's appeal against the penalty u/s 271(1)(c) was allowed.Conclusion:The Tribunal, following legal precedents and lack of evidence to the contrary, ruled in favor of the assessee and directed the deletion of the penalty imposed u/s 271(1)(c) for disallowance u/s 40(a)(ii) for the assessment year 2005-06.