2019 (1) TMI 641 - AT - Income Tax

Tribunal rules penalty unjustified under Income Tax Act

The Tribunal ruled in favor of the assessee, holding that the penalty imposed under section 271(1)(c) of the Income Tax Act was unjustified. The Tribunal ... Penalty u/s 271(1)(c) - disclosure of unaccounted receipts for accounting year in addition to its regular income - Held that:- Evidence is an information only, which does not carry evidentiary value, hence, on the basis of this statement, it cannot be concluded that the assessee has furnished inaccurate particulars of income. Apart from above, the assessee has completely disclosed the details along with copies of accounts. It has made a noting in the return of income showing as to how ₹ 3.00 lakh is not to be included in its income. Such addition has been made, which might have not been changed, but for the purpose of penalty, the stand taken by the assessee deserves to be looked into and deserves to be decided afresh. CIT(A) has confirmed penalty for deemed concealment, whereas, this was not used by the AO as reason for visiting the assessee with penalty. We extracted a part of the penalty order as well as finding of the CIT(A). If both the orders of the Revenue authorities are being examined in the light of the discussion made by the Tribunal in the case Shri Kantibhai Naranbhai Prajpati [2018 (2) TMI 1823 - ITAT AHMEDABAD] then penalty is not sustainable. - Decided in favour of assessee. Issues:Penalty under section 271(1)(c) of the Income Tax Act - Whether inaccurate particulars of income were furnished by the assessee.Analysis:The Appellate Tribunal, ITAT Ahmedabad, heard an appeal by the assessee against the penalty imposed by the Assessing Officer (AO) under section 271(1)(c) of the Income Tax Act. The AO had added a sum of Rs. 3.00 lakhs to the total income of the assessee, alleging inaccurate particulars of income. The AO initiated penalty proceedings based on this addition. The primary contention of the assessee was that the disclosure of income was based on a non-oath statement during a survey and lacked evidentiary value. The assessee argued that it had disclosed all relevant details, including a note explaining why Rs. 3.00 lakhs should not be included in its income. The AO imposed a penalty of Rs. 93,630, equivalent to the tax sought to be evaded.The ld.CIT(A) upheld the penalty but changed the basis for confirming it, relying on Explanation-1 to Section 271(1)(c) of the Act. The ld.CIT(A) noted that the assessee had disclosed Rs. 11.50 lakhs as unaccounted receipts during the survey, but only included Rs. 8.50 lakhs in the return of income filed. The ld.CIT(A) found that the assessee failed to provide details of expenditure to justify the difference in the disclosed amount. The penalty was confirmed under section 271(1)(c) based on the undisclosed income of Rs. 3.00 lakhs.During the appeal, the assessee raised multiple contentions. Firstly, the addition was challenged as it was based on a non-oath statement during the survey. Secondly, the assessee argued that it had disclosed all relevant information, including a note explaining the discrepancy in the disclosed amount. Lastly, the assessee contended that the penalty was imposed for furnishing inaccurate particulars by the AO but was confirmed for concealment by the ld.CIT(A) using Explanation-1. The Tribunal referred to a similar case where the penalty was deleted due to a change in the basis for imposing the penalty by the appellate authority. The Tribunal held that the penalty was not sustainable as there was no concrete evidence of inaccurate particulars furnished by the assessee. The penalty was deleted, and the appeal of the assessee was allowed.In conclusion, the Tribunal found that the penalty imposed on the assessee was not justified as there was insufficient evidence to prove inaccurate particulars of income. The change in the basis for confirming the penalty by the ld.CIT(A) was not supported by the original grounds for penalty imposition. The Tribunal, following precedent, deleted the penalty, ruling in favor of the assessee.