2020 (9) TMI 235 - AT - Income Tax

Tribunal cancels penalty under Section 271(1)(c) for AY 2012-13, citing lack of grounds.

M/s. Shree Naman Developers Limited (Now Known as M/s. Shree Namn Developers Pvt. Ltd.) Versus ACIT, Central Circle-5 (4) Mumbai

M/s. Shree Naman Developers Limited (Now Known as M/s. Shree Namn Developers Pvt. Ltd.) Versus ACIT, Central Circle-5 (4) Mumbai - TMI Issues Involved:1. Confirmation of penalty under Section 271(1)(c) of the Income Tax Act for Assessment Year 2012-13.2. Validity of the penalty order based on the nature of the notice issued by the Assessing Officer (AO).3. Justifiability of the penalty based on the facts and provisions of the Act.4. Impact of the nationwide lockdown on the pronouncement of the order.Issue-Wise Detailed Analysis:1. Confirmation of Penalty under Section 271(1)(c) of the Income Tax Act for Assessment Year 2012-13:The appeal was filed against the order dated 30.01.2017 by the Commissioner of Income Tax (Appeals)-53, Mumbai (CIT(A)), confirming the penalty levied by the AO under Section 271(1)(c) for the Assessment Year 2012-13. The assessee argued that they neither concealed any particulars of income nor furnished inaccurate particulars, and hence, the penalty was unjustified. The AO had added Rs. 10,00,00,000 to the assessee's income, treating it as revenue instead of a capital receipt, which led to the initiation of penalty proceedings.2. Validity of the Penalty Order Based on the Nature of the Notice Issued by the AO:The assessee contended that the penalty order was bad in law as the notice did not specify whether the penalty was for 'concealment of income' or 'furnishing of inaccurate particulars of income.' The tribunal observed that the AO had initiated penalty proceedings for furnishing inaccurate particulars but levied the penalty for both limbs, which was not justifiable. The tribunal relied on the Hon'ble Supreme Court's decision in Reliance Petroproduct Vs. CIT (P) Ltd. 322 ITR 158 SC, stating that mere disallowance of a claim does not amount to furnishing inaccurate particulars.3. Justifiability of the Penalty Based on the Facts and Provisions of the Act:The tribunal noted that the assessee had disclosed the amount of Rs. 10 crores as a settlement capital receipt in its return of income. The AO's query was responded to by the assessee, and the claim was declined, treating the amount as revenue. The tribunal found that the facts did not attract penalty under Section 271(1)(c) as there was no concealment or furnishing of inaccurate particulars. The tribunal further cited the case of Meherjee Cassinath Holdings P. Ltd. Vs. ACIT, Circle-4(2), emphasizing that the notice must clearly specify the charge, which was not done in this case, leading to non-application of mind by the AO.4. Impact of the Nationwide Lockdown on the Pronouncement of the Order:The tribunal acknowledged the delay in pronouncement due to the nationwide lockdown imposed on 24/03/2020 because of the COVID-19 pandemic. The lockdown caused unprecedented disruption in judicial work, and the period of lockdown was excluded while computing the limitation for pronouncement of the order. The tribunal referred to the decision in DCIT V/s JSW Limited, which allowed for the exclusion of the lockdown period from the 90-day pronouncement rule.Conclusion:The tribunal set aside the CIT(A)'s order and deleted the penalty, concluding that there was no justifiable ground for upholding the penalty. The tribunal also addressed the procedural delay due to the pandemic, ensuring compliance with the principles of natural justice. The appeal was allowed in favor of the assessee.Order Pronouncement:The order was pronounced on 04/09/2020, considering the exceptional circumstances due to the COVID-19 pandemic and the resultant nationwide lockdown.