2016 (7) TMI 606 - AT - Income Tax

ITAT rules penalty deletion under section 271(1)(c) for Assessee due to lack of evidence.

M/s Sheetal Mercantile Pvt. Ltd. Versus DCIT, CIRCLE 8 (1), CR Building

The ITAT ruled in favor of the Assessee, deleting the penalty imposed under section 271(1)(c) as it found no evidence of inaccurate particulars being ... Penalty u/s. 271(1)(c) - assessment was made u/s 144 - unaccounted sale consideration - Held that:- We are of the considered view that the assessee has not furnished inaccurate particulars of income and there are no findings of the Assessing Officer and the CIT (Appeals) that the details furnished by the assessee in his return are found to be inaccurate or erroneous or false. Under these circumstances, in our view the penalty in dispute is totally unwarranted and deserve to be deleted. Accordingly, we delete the penalty in dispute made u/s. 271(1)(c) of the I.T. Act and quashed the orders of the authorities below on the issue in dispute and allow the appeal filed by the assessee. Issues:1. Confirmation of penalty by CIT(A) without considering submissions and documentary evidence.2. Disallowance of certain expenses and addition of unaccounted sale consideration leading to penalty proceedings under section 271(1)(c).3. Justification of penalty imposition by AO and confirmation by CIT(A).4. Appeal against penalty order before ITAT.5. Assessment of whether inaccurate particulars were furnished to evade taxes justifying penalty imposition under section 271(1)(c).Issue 1:The Assessee appealed against the CIT(A)'s confirmation of a penalty without considering the submissions and documentary evidence provided. The Assessee argued that the penalty was unjustified as all relevant information was available to the authorities.Issue 2:The case involved disallowance of expenses and addition of unaccounted sale consideration leading to penalty proceedings under section 271(1)(c). The AO imposed a penalty of Rs. 54,615 based on the Assessee's failure to substantiate claims and provide documentary evidence during assessment proceedings.Issue 3:The AO justified the penalty imposition by stating that the Assessee was aware of the claims made regarding inaccurate particulars of income. The CIT(A) upheld the penalty, citing that the Assessee furnished inaccurate particulars to evade taxes, leading to the penalty under section 271(1)(c).Issue 4:The Assessee appealed against the penalty order before the ITAT, challenging the imposition of the penalty under section 271(1)(c) based on the grounds that no concealment or inaccurate particulars were furnished.Issue 5:The ITAT analyzed whether the Assessee had indeed furnished inaccurate particulars of income to evade taxes justifying the penalty under section 271(1)(c). The ITAT referred to case laws and held that the penalty was unwarranted as no inaccurate particulars were furnished, leading to the deletion of the penalty and allowing the Assessee's appeal.In conclusion, the ITAT ruled in favor of the Assessee, deleting the penalty imposed under section 271(1)(c) as it found no evidence of inaccurate particulars being furnished. The ITAT emphasized that the mere fact of an addition being confirmed in quantum proceedings does not automatically warrant a penalty, and the penalty should only be imposed if inaccurate particulars are indeed furnished to evade taxes.