2014 (12) TMI 1411 - AT - Income Tax

Revenue appeal dismissed for penalty deletion due to lack of evidence in income concealment case

The Tribunal dismissed the Revenue's appeal against the deletion of the penalty under section 271(1)(c) for the assessment year 2008-09. The decision was ... Penalty u/s 271(1)(c) - additions in the Net Profit Ratio @5% on estimate basis as the assessee could not produce the relevant details asked for, during the course of assessment proceedings due to the fact that they were misplaced by the Accountant - meaning of word ‘concealment’ and ‘inaccurate’ - HELD THAT:- CIT(A) has rightly applied the decision of Reliance Petro Products Ltd [2010 (3) TMI 80 - SUPREME COURT] which is squarely applicable in the present case of the assessee as held that penalty based merely on the finding given in assessment order is not valid. CIT(A) has rightly applied the decision of the Hon’ble Delhi High Court decision in the case of CIT vs. JK Synthetic Ltd. [1996 (2) TMI 123 - DELHI HIGH COURT] wherein it was held when the concealment proceedings u/s. 271(1)(c) in a case is purely based on assessment order penalty cannot be levied. Levy of penalty in this case is not justified particularly when the assessment was framed on the income determined on estimate basis and without bringing any material on record to substantiate that the assessee willfully and intentionally concealed the income or furnished the inaccurate particulars of the income, hence, we do not see any reason to interfere with the order of the Ld. CIT(A), accordingly, we uphold the same and decide the issue against the Revenue. Issues involved:- Appeal against deletion of penalty under section 271(1)(c) of the Income Tax Act for assessment year 2008-09.Analysis:1. The appeal was filed by the Revenue against the order of the Ld. Commissioner of Income Tax (Appeals) concerning the deletion of a penalty imposed under section 271(1)(c) of the Income Tax Act. The Revenue contended that the assessee failed to produce supporting bills or vouchers despite opportunities, leading to an agreed assessment of net profit at 5%. The Revenue argued that the explanation provided by the assessee was not substantiated, and the claimed expenses were not supported by evidence, invoking the provisions of section 271(1)(c) of the Act.2. The case was heard on multiple occasions, with the assessee failing to appear, resulting in an ex parte decision. The assessment was completed with an income of Rs. 80,55,870 against the declared Rs. 32,00,692, as the assessee did not produce books of accounts or supporting documents. Subsequently, a penalty of Rs. 16,60,000 was imposed under section 271(1)(c). The Ld. Commissioner of Income Tax (Appeals) allowed the appeal and deleted the penalty.3. The Tribunal reviewed the Ld. CIT(A)'s decision and found that the penalty was deleted based on an agreed assessment due to the inability to produce relevant details, which were allegedly misplaced by the Accountant. Citing legal precedents, including the Delhi High Court and Supreme Court judgments, the Tribunal concluded that a penalty cannot be solely based on the assessment order. It was emphasized that the mere addition or disallowance of expenses does not imply concealment of income.4. The Tribunal further noted that the conduct of the assessee did not warrant a penalty under section 271(1)(c) as there was no contumacious behavior. Referring to the decision in the case of CIT vs. Reliance Petro Products Ltd., it was established that the law on 'concealment' and 'inaccurate particulars' remains valid. The Tribunal upheld the Ld. CIT(A)'s decision, stating that the levy of penalty was unjustified without evidence of willful or intentional concealment of income.5. In conclusion, the Tribunal dismissed the Revenue's appeal, maintaining the deletion of the penalty under section 271(1)(c) for the assessment year in question. The decision was based on legal principles and precedents emphasizing the necessity of substantial evidence to justify the imposition of penalties under the Income Tax Act.Judgment:The appeal filed by the Revenue against the deletion of the penalty under section 271(1)(c) for the assessment year 2008-09 was dismissed by the Tribunal. The decision was based on the lack of substantial evidence to prove willful or intentional concealment of income by the assessee, in accordance with legal precedents and established principles governing the imposition of penalties under the Income Tax Act.