2020 (1) TMI 820 - AT - Income Tax

Penalty under Income Tax Act not sustained without clear evidence. Deletion of penalty ordered.

The Tribunal held that the penalty under section 271(1)(c) of the Income Tax Act could not be sustained due to the lack of clear evidence of concealment ... Penalty u/s 271(1)(c) - difference between the slump sale claimed and that of the learned Assessing Officer as per section 50C - Defective notice - non specification of charge - under which limb of section 271(1)( c ) of the Act the penalty was levied ? - HELD THAT:- Penalty order does not reveal that the learned Assessing Officer undertake any new material that was suppressed by the assessee, pursuant to which the detection of concealment of income was found. It’s not the case of the Revenue that the assessee did not reveal the auditor’s report or their claim of slump sale under section 50B of the Act. Further it could be seen that except the valuation covered by the stamp duty, there is nothing on record to show that the value of the slump sale was not ₹ 1.2 crores. Even according to the penalty order, immediately on the learned Assessing Officer issuing show cause notice, the assessee gave up the claim of slump sale and by way of revised computation of income accepted the opinion of the learned Assessing Officer and paid the taxes thereon with interest. The penalty order does not clearly specify under which limb of section 271(1)(c) of the Act, the penalty was levied. So also, the impugned order by the Ld. CIT(A) also not clear on that aspect. For these reasons, viewing from any angle, we are of the considered opinion that penalty cannot be sustained and the same is liable to be deleted. We accordingly direct for its deletion. - Decided in favour of assessee. Issues Involved:1. Whether the assessee concealed income or furnished inaccurate particulars thereof under section 271(1)(c) of the Income Tax Act.2. Whether the penalty imposed under section 271(1)(c) was valid given the circumstances of the case.3. Whether the notice for penalty was valid if it did not specify the limb under which the penalty proceedings were initiated.Issue-wise Detailed Analysis:1. Concealment of Income or Furnishing Inaccurate Particulars:The primary issue was whether the assessee had concealed income or furnished inaccurate particulars thereof. The assessee initially declared a slump sale of Rs. 1.2 crores based on an auditor's certificate and revised the computation to reflect a higher value of Rs. 1,93,16,000/- as per section 50C of the Income Tax Act after a show-cause notice from the Assessing Officer. The Assessing Officer argued that the revision was made only after detecting the concealment, thus initiating penalty proceedings under section 271(1)(c). However, the Tribunal noted that the assessee had a bona fide belief in the slump sale valuation and revised the computation voluntarily to avoid litigation, which does not constitute concealment or furnishing inaccurate particulars.2. Validity of Penalty under Section 271(1)(c):The Tribunal referred to several judicial precedents, including CIT vs. Reliance Petroproducts Pvt Ltd [2010] 322 ITR 158 and CIT vs. DCM Limited [2013] 359 ITR 0101 (Delhi), which held that merely making a claim that is not accepted does not attract penalty under section 271(1)(c). The Tribunal emphasized that the penalty should not be imposed unless there is clear evidence of factual concealment or inaccurate particulars. The Tribunal found that the Assessing Officer did not uncover any new material that indicated suppression of income by the assessee. Therefore, the penalty was deemed unsustainable.3. Specificity of Notice for Penalty:The Tribunal also addressed the issue of whether the penalty notice was valid if it did not specify the limb under which the penalty proceedings were initiated. Citing the judgments in CIT vs. Manjunatha Cotton & Ginning Factory, 359 ITR 565 (Kar) and Commissioner of Income Tax v. SSA’s Emerald Meadows (2016) 73 taxman.com 241 (Kar), the Tribunal underscored that the notice must explicitly state whether the penalty is for concealment of income or furnishing inaccurate particulars. The Tribunal found that the penalty order and the CIT(A)'s order did not clearly specify the grounds, rendering the penalty invalid.Conclusion:The Tribunal concluded that the penalty under section 271(1)(c) could not be sustained due to the lack of clear evidence of concealment or furnishing inaccurate particulars and the failure to specify the grounds for penalty in the notice. Consequently, the Tribunal directed the deletion of the penalty and allowed the appeal of the assessee. The order was pronounced in the Open Court on 20th January, 2020.