Tribunal rules in favor of assessee, deletes penalty under IT Act

The Tribunal allowed the appeal, ruling in favor of the assessee and deleting the penalty imposed under section 271(1)(c) of the IT Act for the assessment year 2009-10. The Tribunal accepted the assessee's explanation as bonafide, noting that the discrepancy in closing work in progress was based on incomplete details obtained from government departments. As the total receipts declared by the assessee exceeded the information from departments, the addition did not amount to concealment of income. The decision was pronounced on 29/08/2018.

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Issues:
1. Penalty under section 271(1)(c) of the IT Act for the assessment year 2009-10.

Analysis:
The appeal was against the penalty order passed under section 271(1)(c) of the IT Act for the assessment year 2009-10. The assessee, a partnership firm engaged in civil contract work, faced penalty proceedings due to an addition made by the AO on account of suppression of closing work in progress. The AO initiated penalty proceedings and levied a penalty of Rs. 4,70,269, being 100% of the tax sought to be evaded. The assessee challenged this action before the ld. CIT (A) but was unsuccessful.

The crux of the matter revolved around the discrepancy in the total receipts declared by the assessee and the information obtained by the AO from government departments. The AO added Rs. 14,25,059 as suppression of closing work in progress based on this difference. The assessee argued that since they had declared total receipts higher than the information provided by the departments, the addition should not amount to concealment of income. The assessee contended that the addition was based on incomplete details and should be deleted.

The Tribunal considered the submissions and facts on record. While acknowledging that the addition had attained finality, it noted that the discrepancy in closing work in progress was based on details obtained from departments. The Tribunal found that the total receipts declared by the assessee exceeded the information from departments, suggesting the difference could be part of declared receipts. Additionally, since the assessee did not claim the amount as part of the opening balance of work in progress for the subsequent year, the addition did not amount to concealment of income. The Tribunal accepted the assessee's explanation as bonafide, deleting the penalty levied under section 271(1)(c) of the Act.

In conclusion, the Tribunal allowed the appeal of the assessee, ruling in their favor and deleting the penalty. The decision was pronounced in open court on 29/08/2018.

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