Tribunal overturns penalty under Income Tax Act, directs deletion. Assessee's appeal allowed.

The tribunal concluded that the penalty under section 271(1)(c) of the Income Tax Act was not justified. It set aside the Commissioner of Income Tax (Appeals)'s order and directed the Assessing Officer to delete the penalty. The appeal of the assessee was allowed, and the decision was pronounced on 01/06/2020 at Ahmedabad.

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Issues Involved:
1. Legality of the penalty order passed by the Commissioner of Income Tax (Appeals).
2. Validity of penalty under section 271(1)(c) of the Income Tax Act, 1961.
3. Specificity of the charge in the penalty notice issued under section 274.
4. Determination of whether the assessee furnished inaccurate particulars of income.

Issue-wise Detailed Analysis:

1. Legality of the penalty order passed by the Commissioner of Income Tax (Appeals):
The assessee challenged the order of the Commissioner of Income Tax (Appeals)-2, Vadodara, dated 07/08/2017, which confirmed the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961. The assessee contended that the order was bad in law and contrary to legal pronouncements, arguing for its quashing.

2. Validity of penalty under section 271(1)(c) of the Income Tax Act, 1961:
The primary contention was that the penalty imposed at 200% of the tax sought to be evaded was unjustified as the assessee had not furnished inaccurate particulars nor concealed particulars intentionally. The assessee had revised the computation of income during the assessment proceedings voluntarily, and thus, the penalty should be dropped.

3. Specificity of the charge in the penalty notice issued under section 274:
The assessee argued that the penalty proceedings were void ab initio because the notice issued under section 274 read with section 271 did not specify whether the penalty was for concealment of income or furnishing inaccurate particulars. The notice's ambiguity rendered it unclear which default the penalty was being levied for.

4. Determination of whether the assessee furnished inaccurate particulars of income:
The facts revealed that the assessee, engaged in the construction business and a partner in partnership firms, claimed a deduction under section 54F of the Act, which was later revised during assessment proceedings. The Assessing Officer (AO) viewed this as furnishing inaccurate particulars of income, leading to the initiation of penalty proceedings and imposition of a penalty of Rs. 29,50,170. The CIT (A) reduced the penalty to 200% of the tax sought to be evaded, citing that the assessee had consciously claimed a higher exemption under section 54F without furnishing necessary details initially.

Detailed Analysis:

Legality of the Penalty Order:
The assessee contended that the penalty order was contrary to legal pronouncements and should be quashed. The CIT (A) upheld the penalty but reduced it from 300% to 200% of the tax sought to be evaded, indicating that the assessee had not provided a plausible explanation for the higher exemption claim under section 54F.

Validity of Penalty under Section 271(1)(c):
The assessee argued that the penalty was unjustified as there was no conscious concealment or deliberate furnishing of inaccurate particulars. The revised computation was filed voluntarily before any detection by the Revenue. However, the CIT (A) held that the assessee could not be absolved from penal consequences merely because the computation was revised after the AO's inquiry.

Specificity of the Charge in Penalty Notice:
The assessee claimed that the penalty notice was ambiguous, not specifying whether the penalty was for concealment or furnishing inaccurate particulars. The tribunal noted that the AO had mentioned the specific charge in the penalty order, stating that the assessee furnished inaccurate particulars of income. The tribunal referenced the jurisdictional High Court's judgment, which required a clear finding for penalty imposition.

Determination of Inaccurate Particulars:
The tribunal analyzed whether the assessee furnished inaccurate particulars. It was noted that the deduction under section 54F was claimed for investments in two properties, which was not doubted by the authorities. The revised computation was filed promptly upon receiving the notice under section 142(1). The tribunal found no material suggesting deliberate furnishing of inaccurate particulars by the assessee. It emphasized that mere disallowance or addition during quantum proceedings does not justify penalty imposition without evidence of conscious concealment or inaccurate particulars.

Conclusion:
The tribunal concluded that the penalty under section 271(1)(c) was not justified. It set aside the CIT (A)'s order and directed the AO to delete the penalty. The appeal of the assessee was allowed, and the order was pronounced on 01/06/2020 at Ahmedabad.

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