Tribunal revokes penalty under section 271(1)(c)

The Tribunal set aside the Ld CIT(A)'s order and directed the AO to delete the penalty levied under section 271(1)(c) of the Act. The appeal by the assessee was allowed, and the penalty was revoked.

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Issues:
Penalty under section 271(1)(c) of the Act for disallowance of Portfolio Management fee deduction.

Detailed Analysis:
The appeal was against the penalty imposed by the AO and upheld by Ld CIT(A) for disallowance of a deduction claimed by the assessee against short term capital gain. The AO disallowed the claim, leading to penalty proceedings under section 271(1)(c) of the Act. The AO imposed a penalty of Rs.29,258, considering the claim as furnishing inaccurate particulars of income. The Ld CIT(A) upheld the penalty, citing the claim as untenable in law and referring to a decision by the Hon'ble Kerala High Court. The assessee argued that the claim was based on court decisions and should not attract a penalty.

The Ld AR cited case laws to support that no penalty should be imposed when no fault was found with the particulars furnished by the assessee. The Ld D.R, however, supported the Ld CIT(A)'s order. The Tribunal noted that the assessee based the claim on tribunal decisions and explained the deduction against short term capital gain. The assessee's explanation was not found false, and the Tribunal referred to the requirement under Explanation 1 to section 271 regarding false explanations.

The Tribunal highlighted that the assessee's claim was supported by tribunal decisions and that no false particulars were furnished. Referring to the decision in Reliance Petroproducts, the Tribunal emphasized that a claim unsustainable in law does not automatically lead to penalty. It was noted that additions in assessment do not automatically attract penalty, and the penalty proceedings require a fresh examination. The Tribunal concluded that the AO and Ld CIT(A) were not justified in levying and upholding the penalty, respectively.

Therefore, the Tribunal set aside the Ld CIT(A)'s order and directed the AO to delete the penalty levied under section 271(1)(c) of the Act. The appeal by the assessee was allowed, and the penalty was revoked.

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