2016 (8) TMI 1193 - AT - Income Tax

Tribunal overturns penalties under Income Tax Act, emphasizes cooperation and accurate computations

The Tribunal allowed all four appeals of the assessees, directing the Assessing Officer to delete the penalties imposed under section 271(1)(c) of the ... Penalty under section 271(1)(c)- Held that:- In the case of both the assessees, some discrepancies with respect to the stock were observed by the learned Assessing Officer during the course of survey which arose out of the impurity in the stock which are gold and silver and that requires accurate arithmetic computation to reconciliation. Further the assessees had accepted to the computations made by the learned Assessing Officer and did not agitate in order to avoid prolonged litigation and accordingly filed their respective returns of income.We hereby direct the learned Assessing Officer to delete the penalty levied under section 271(1)(c) of the Act in the case of both the assessees for all the relevant assessment years. See ACIT Vs. Ram Thanga Nagai Maligai [2015 (9) TMI 1101 - ITAT CHENNAI ] - Decided in favour of assessee. Issues Involved:Penalty under section 271(1)(c) of the Income Tax Act for assessment years 2009-10 & 2010-11.Analysis:Issue 1: Penalty ImpositionThe appeals were filed by multiple assessees against the penalty levied under section 271(1)(c) of the Income Tax Act for the assessment years 2009-10 & 2010-11. The crux of the issue in both cases was the sustenance of penalties by the Commissioner of Income Tax (Appeals) based on discrepancies found during a survey conducted at the business premises of the assessees. The penalties were imposed due to additions made as a result of the survey proceedings, which the assessees argued were due to impurity in stock and related arithmetic computations, not concealment of income or furnishing inaccurate particulars. The assessees had accepted the discrepancies found during the survey and filed their income tax returns accordingly.Issue 2: Tribunal's DecisionThe Tribunal carefully considered the contentions put forth by the assessees' Authorized Representative and found merit in their arguments. It was noted that the discrepancies in stock arose from impurities in gold and silver, requiring accurate arithmetic computations for reconciliation. The assessees accepted the computations made by the Assessing Officer to avoid prolonged litigation and filed their returns accordingly. The Tribunal referred to a previous decision where penalties were deleted in a similar situation, emphasizing that there was no concealment of income or furnishing of inaccurate particulars. Therefore, the Tribunal directed the Assessing Officer to delete the penalties imposed under section 271(1)(c) of the Act for all relevant assessment years in both cases.ConclusionThe Tribunal allowed all four appeals of the assessees, emphasizing that the penalties were unjustified given the circumstances surrounding the discrepancies found during the survey. The decision highlighted the importance of accurate computations and the assessees' cooperation in resolving the issues without any intent to conceal income. The judgment serves as a precedent for cases where penalties are imposed based on survey findings without evidence of deliberate wrongdoing.---