Appeals Tribunal cancels penalties under Income Tax Act for 2008-09 and 2009-10

The Appeals regarding the sustainability of the penalty under section 271(1)(c) of the Income Tax Act for the assessment years 2008-09 and 2009-10 were brought before the Tribunal. The Judicial Member and the Accountant Member had differing opinions on the validity of the penalty. The third member sided with the Judicial Member, concluding that the penalty imposed was not sustainable in law. As a result, the penalty was canceled, and the assessee's appeal was allowed. Other legal grounds were not pursued, and the appeals were decided in favor of the assessee on June 20, 2018.

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Issues:
Appeal regarding the sustainability of penalty under section 271(1)(c) of the Income Tax Act, 1961.

Analysis:
The judgment involves a set of four Appeals by two Assessees for the assessment years 2008-09 and 2009-10. The Tribunal took up the Appeals together due to common issues. A difference of opinion arose between the Judicial Member (J.M.) and the Accountant Member (A.M.) regarding the sustainability of the penalty under section 271(1)(c) of the Income Tax Act. The J.M. believed that the penalty imposed for concealment/furnishing inaccurate particulars of income was not valid in law, while the A.M. argued that stating both limbs for which the penalty is leviable is inconsequential. A reference was made to the Hon'ble President of the tribunal to resolve this difference of opinion.

The third member rendered an opinion agreeing with the J.M. that the penalty order imposing a penalty under section 271(1)(c) in the manner stated was not sustainable in law. The third member's decision was based on the discussions in the order, which concluded that the penalty imposed was not valid. The penalty was directed to be cancelled, allowing the assessee's appeal.

During the hearing, other legal grounds were not pressed before the regular bench. The grounds related to the merits of the penalty on different additions were deemed not necessary for adjudication. Consequently, the appeals of the assessee were allowed, and the order was pronounced in open court on June 20, 2018.

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