2016 (2) TMI 227 - AT - Income Tax

Tribunal Upholds Reduced Penalty for Tax Evasion

The Tribunal upheld the CIT(A)'s decision to reduce the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961 for A.Y 2008-09 to 100% of the ... Penalty levied u/s 271(1)(c) - penalty imposed by the AO @ 200% - CIT(A) restricting the penalty to 100% of the tax sought to be evaded - Held that:- AR has already deposited the tax, interest and penalty on the concealed income. The ld. CIT(A) has arrived at his conclusion by relying on the order of the Hon'ble Jurisdictional High Court in the case of CIT VS. Mak Data Ltd [2013 (1) TMI 574 - DELHI HIGH COURT] and held the AO to be right in charging the assessee company with concealment of income and furnishing of inaccurate particulars. However, keeping in view the facts and circumstances of the case he has reduced the quantum penalty to 100%. We find the penalty imposed by the AO @ 200% is arbitrary and excessive. We find substance in the order relied upon by the assessee in the case of LMP Precision Engineering Co. Ltd [1997 (3) TMI 127 - ITAT AHMEDABAD-A ] wherein it has been held that a penalty of 100% of tax which the appellant has tried to avoid will meet the end of justice in such cases. Also in view of the fact that the assessee has already deposited the tax, interest and penalty, we decline to interfere with the order of the first appellate authority. - Decided against revenue Issues involved:1. Penalty imposed under section 271(1)(c) of the Income-tax Act, 1961 for A.Y 2008-09.2. Justification of penalty reduction to 100% by CIT(A).3. Assessment proceedings and penalty imposition by the Assessing Officer.4. Appeal against the penalty by the Revenue.Detailed Analysis:1. The appeal filed by the Revenue challenged the order of the CIT(A) restricting the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961 for A.Y 2008-09 to 100% of the tax sought to be evaded. The case involved discrepancies in the sale of immovable properties by the assessee as per the ITS details available with the department. The Assessing Officer initiated penalty proceedings against the assessee, leading to the imposition of a 200% penalty amounting to Rs. 25,33,380. The CIT(A) reduced the penalty to 100%, prompting the Revenue's appeal.2. The Revenue contended that the CIT(A) was unjustified in granting relief to the assessee and failed to appreciate the nature and extent of concealment. The Assessing Officer had imposed the penalty within the prescribed limits under section 271(1)(c) of the Act. The assessee, through the ld. AR, argued that the penalty was arbitrary and excessive. Citing legal precedents, the assessee highlighted that the penalty imposition is not automatic and emphasized the cooperation extended during assessment proceedings.3. The ld. AR reiterated that the assessee did not appeal against the assessment order passed under section 147 r.w.s. 143(3) of the Act, emphasizing the decision in Sir Shadi Lai Sugar Mills case. The assessee maintained that the penalty was unwarranted, citing the LMP Precision Engineering Co. Ltd. case where a penalty of 100% of the tax sought to be avoided was deemed just. The assessee had already paid the reduced penalty amount of Rs. 12,66,690 as directed by the CIT(A).4. The Tribunal found that the CIT(A) had reduced the penalty to 100% based on the jurisdictional High Court's decision in CIT VS. Mak Data Ltd. The penalty imposed by the AO at 200% was deemed arbitrary and excessive. Considering the facts, the Tribunal declined to interfere with the CIT(A)'s order, especially since the assessee had already paid the tax, interest, and penalty. Consequently, the appeal of the Revenue was dismissed, upholding the CIT(A)'s decision to reduce the penalty to 100%.This detailed analysis covers the issues involved in the legal judgment, providing a comprehensive overview of the proceedings and decisions made by the authorities involved.