2020 (9) TMI 233 - AT - Income Tax

Assessee wins appeal, penalties removed under Income Tax Act sections 271(1)(c) and 271B.

Arvind Kumar Arora, Prop. M/s. Milap Polymers Versus ITO, Ward-34 (2), New Delhi

Arvind Kumar Arora, Prop. M/s. Milap Polymers Versus ITO, Ward-34 (2), New Delhi - TMI Issues Involved:1. Penalty levied under Section 271(1)(c) of the Income Tax Act.2. Penalty levied under Section 271B of the Income Tax Act.Issue-wise Detailed Analysis:1. Penalty Levied under Section 271(1)(c):The assessee filed an appeal against the penalty of Rs. 160,019 levied under Section 271(1)(c) of the Income Tax Act, confirmed by the Commissioner of Income Tax (Appeals). The assessee argued that the penalty was wrongly imposed as there was no intention to conceal income. The assessee had revised the computation of income during the assessment proceedings, adding Rs. 3,09,974 suo moto and later surrendered an additional Rs. 2,90,026 to avoid litigation. The Assessing Officer, however, was not convinced and initiated penalty proceedings, which were confirmed by the CIT(A). The CIT(A) held that the revised computation indicated concealment, and the explanation provided was not bona fide.The Tribunal admitted additional grounds raised by the assessee, which questioned the recording of proper satisfaction and the specific charge of concealment or furnishing inaccurate particulars. The Tribunal found that the notice under Section 274 and the assessment order did not specify the charge, and the penalty was levied on an estimated addition of Rs. 6 lakhs. Citing the Delhi High Court's decision in Principal Commissioner Of Income Tax Versus Sahara India Life Insurance Co Ltd, the Tribunal held that the penalty could not be sustained as the specific charge was not recorded. Consequently, the penalty of Rs. 160,019 was deleted, and the appeal was allowed.2. Penalty Levied under Section 271B:The second appeal concerned the penalty of Rs. 88,220 levied under Section 271B for not getting the accounts audited as required under Section 44AB. The assessee argued that the accounts were audited before the due date, and the audit report was obtained on 25.09.2012. The assessee contended that there was no requirement to file the audit report electronically for the assessment year 2012-13, as per the CBDT Notification effective from AY 2013-14.The Assessing Officer and CIT(A) held that the assessee failed to disclose the income from the cloth business and did not get the accounts audited before filing the return. The Tribunal, however, noted that the tax audit report was dated prior to the due date, and the requirement to file the audit report electronically was applicable from AY 2013-14. The Tribunal concluded that the assessee had a reasonable cause for not filing the audit report with the return and that the penalty under Section 271B was not justified. Therefore, the penalty of Rs. 88,220 was cancelled, and the appeal was allowed.Conclusion:Both appeals filed by the assessee were allowed. The penalties levied under Sections 271(1)(c) and 271B were deleted based on the lack of specific charges and the reasonable cause for not filing the audit report, respectively. The Tribunal's decision was pronounced in the open court on 04/09/2020.