ITAT rules for assessee, cancels penalty under Income Tax Act 1961

The Third Member of the ITAT ruled in favor of the assessee, leading to the deletion of the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 for assessment years 2006-07, 2007-08, and 2008-09. The appeals were allowed, and the penalty initially imposed and upheld by the CIT(A) was set aside. The final order pronounced in open court confirmed the deletion of the penalty, concluding the matter in favor of the appellant.

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Issues:
Appeal against penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 for assessment years 2006-07, 2007-08, and 2008-09.

Analysis:

1. Imposition of Penalty by Assessing Officer and CIT(A):
The appellant filed appeals against the penalty imposed by the Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961, which was subsequently upheld by the CIT(A)-Jammu. The Members of the co-ordinate Bench passed divergent orders regarding the imposition and affirmation of the penalty, leading to a reference under section 255(4) of the Act to the Hon'ble President of ITAT for adjudication. The Third Member, in a decision dated 06.02.2019, ruled in favor of the assessee, directing the appeals to be listed before the Division Bench for a final order in accordance with the majority view. Pursuant to section 255(4) of the Act, the majority view is considered final, resulting in the deletion of the penalty imposed by the Assessing Officer and sustained by the CIT(A).

2. Consequential Order and Deletion of Penalty:
The Third Member's decision in favor of the assessee led to the deletion of the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961. As per the majority view, the penalty was deemed to be not applicable, and the appeals filed by the assessee were allowed. Consequently, the penalty that was initially imposed and sustained by the CIT(A) was set aside, and the appeals were decided in favor of the assessee. The order pronouncement in the open Court on 26.03.2019 finalized the deletion of the penalty, bringing the matter to a close in favor of the appellant.

This detailed analysis of the judgment highlights the legal proceedings involving the imposition and subsequent deletion of the penalty under section 271(1)(c) of the Income Tax Act, 1961, for the relevant assessment years, ultimately resulting in a favorable outcome for the assessee.

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