Income Tax Appellate Tribunal cancels penalty under section 271(1)(c) - CBDT clarification supported

The Appellate Tribunal dismissed the Revenue's appeal and canceled the penalty under section 271(1)(c) of the Income Tax Act, 1961. The Tribunal held that since the income was charged under Minimum Alternate Tax provisions, imposing a penalty for additions made under normal provisions was not justified. This decision aligns with the clarification by the CBDT and is supported by the Delhi High Court's ruling in a similar case, upheld by the Supreme Court.

---

---

Issues:
Challenge to order imposing penalty under section 271(1)(c) of the Income Tax Act, 1961.

Analysis:
1. The Revenue challenged the order of the Commissioner of Income Tax (Appeals) confirming the penalty imposed on the assessee under section 271(1)(c) of the Income Tax Act, 1961.
2. The Assessing Officer initiated penalty proceedings due to the assessee's failure to declare capital gain income and unsupported deduction claimed under section 80JJA of the Act.
3. The penalty was imposed under section 271(1)(c) for furnishing inaccurate particulars of income, which was later deleted by the Commissioner of Income Tax (Appeals).
4. The assessee argued that since there was no tax liability under normal provisions of law and taxes were paid under Minimum Alternate Tax (MAT) provisions, penalty under section 271(1)(c) was not applicable.
5. The CBDT's circular clarified that penalty under section 271(1)(c) is not attracted where income tax payable under normal provisions is less than tax payable under MAT provisions.
6. The decision of the Hon'ble Delhi High Court in CIT vs. Nalwa Sons Investments Limited supported the position that penalty under section 271(1)(c) cannot be imposed if taxes are paid under MAT provisions.
7. The Supreme Court dismissed the Special Leave Petition filed against the Delhi High Court's decision, reinforcing the stance that penalty under section 271(1)(c) is not applicable in such cases.
8. The Appellate Tribunal held that since the income was charged under MAT provisions, the imposition of penalty under section 271(1)(c) for additions made under normal provisions was not justified.
9. Consequently, the Tribunal dismissed the Revenue's appeal, directing the cancellation of the penalty imposed by the Assessing Officer.

This detailed analysis of the judgment highlights the key issues, arguments presented, legal precedents cited, and the final decision of the Appellate Tribunal in dismissing the Revenue's appeal and canceling the penalty under section 271(1)(c) of the Income Tax Act, 1961.

---