2018 (12) TMI 184 - AT - Income Tax

Tribunal cancels penalty under Income-tax Act citing lack of grounds, improper penalty initiation

The Dy. Commissioner of Income Tax, Circle 1 (1), Pune Versus Chetas Control Systems Pvt. Ltd.

The Dy. Commissioner of Income Tax, Circle 1 (1), Pune Versus Chetas Control Systems Pvt. Ltd. - TMI Issues:- Appeal against order of CIT(A) regarding penalty under section 271(1)(c) of the Income-tax Act, 1961.Analysis:1. The Revenue appealed against the CIT(A)'s order deleting the penalty under section 271(1)(c) of the Act. Despite the absence of the assessee during the proceedings, the Tribunal proceeded with the appeal after hearing the Departmental Representative for the Revenue.2. The grounds of appeal raised by the Revenue included contentions regarding the deletion of penalty levied under section 271(1)(c) of the Act. The CIT(A) had deleted the penalty, stating that Explanation-1 of the section cannot be invoked for inaccurate particulars of income, leading to the Revenue's appeal.3. The main issue in the appeal was the deletion of the penalty under section 271(1)(c) of the Act. The case involved a domestic company engaged in manufacturing and installation of engineering goods. The Assessing Officer disallowed certain expenditures as revenue expenditure and initiated penalty proceedings for concealing income and furnishing inaccurate particulars.4. The CIT(A) deleted the penalty, and the Tribunal analyzed the penalty provisions under section 271(1)(c) of the Act. It was noted that penalty proceedings should be initiated based on specific grounds, and the Assessing Officer must levy penalty for the identified default. The Tribunal referred to a judgment by the Bombay High Court emphasizing the importance of specifying the grounds for penalty initiation.5. The Tribunal reviewed the facts of the case and observed that the Assessing Officer had initiated penalty proceedings for inaccurate particulars of income, which was in line with the legal requirements. However, the penalty order levied by the Assessing Officer penalized the assessee for both concealing income and furnishing inaccurate particulars, which was deemed invalid.6. The Tribunal upheld the CIT(A)'s decision to delete the penalty, concluding that penalizing the assessee on both limbs of section 271(1)(c) was not justified. Consequently, the Revenue's appeal was dismissed, and the penalty under section 271(1)(c) of the Act was deleted.This detailed analysis of the judgment highlights the key issues, legal provisions, and the Tribunal's reasoning behind dismissing the Revenue's appeal against the deletion of the penalty levied under section 271(1)(c) of the Income-tax Act, 1961.