2021 (2) TMI 1134 - AT - Income Tax

Tribunal rules in favor of appellant, overturns penalties. No concealment or income discrepancies found.

The Tribunal allowed the appeal, ruling in favor of the appellant and deleting the penalties imposed by the lower authorities. The Tribunal found no ... Penalty u/s 271(1)(c) - Addition u/s 43B - Assessee voluntarily offered to tax the outstanding MVAT and sales tax liability as its income - HELD THAT:- We find that learned CIT(A) is totally wrong in holding that just because 43B liability is shown by tax audit report penalty has to be fastened upon the assessee. The assessee has furnished all particulars there is no concealment or furnishing of inaccurate particular of income. Just because assessee's claim is not accepted the same does not ipso facto lead to levy of penalty. Similarly, there is small difference between 26AS and income returned. This is also very minor and the assessee does not deserve to be visited with the rigour of penalty. We are of the considered opinion that assessee's conduct is not contumacious and his claims are not mala fide. Hence, assessee should not be visited with rigour of penalty. Accordingly, we set aside the orders of the authorities below and delete the penalty. Appeal filed by the assessee stands allowed. Issues:1. Levy of penalty under section 271(1)(c) for inaccurate particulars of income and concealment of income.2. Disallowance under section 43B of the I.T. Act for non-payment of Service Tax and Maharashtra Value Added Tax (MVAT).3. Discrepancy between Profit & Loss Account and form No. 26AS leading to penalty imposition.Issue 1: Levy of Penalty under section 271(1)(c)The appeal challenged the order of the Assessing Officer (AO) for imposing a penalty of Rs. 8,39,460 under section 271(1)(c) of the Act. The appellant argued that no inaccurate particulars of income were furnished, and no concealment took place. The AO disallowed an amount under section 43B of the Act, which the appellant claimed was unjustified. The appellant voluntarily offered to tax the outstanding MVAT and sales tax liability, which was not acknowledged by the AO. The AO also imposed a penalty for a difference between AIR information and the income disclosed in the Profit & Loss Account. The Tribunal initially disposed of the appeal but later recalled it for further consideration.Issue 2: Disallowance under section 43B of the I.T. ActThe AO disallowed Rs. 27.15 lakhs under section 43B of the I.T. Act due to non-payment of Service Tax and MVAT liabilities. The appellant argued that these amounts were not due as a result of disputes and were not paid by the due date of filing the return of income. The AO considered these claims incorrect and imposed a penalty under section 271(1)(c) for inaccurate furnishing of particulars of income. The CIT(A) dismissed the appellant's arguments based on the tax audit report, holding that the liability of tax was mentioned, and the penalty was justified. However, the Tribunal disagreed with this reasoning and deleted the penalty, citing previous judgments and the absence of concealment or inaccurate particulars of income.Issue 3: Discrepancy between Profit & Loss Account and form No. 26ASA smaller amount of Rs. 1,257 was added due to discrepancies between the Profit & Loss Account and form No. 26AS. The AO concluded that this discrepancy constituted filing inaccurate particulars of income and imposed a penalty. The CIT(A) upheld this penalty, but the Tribunal found the difference minor and the appellant's conduct not contumacious. Consequently, the Tribunal set aside the penalty, emphasizing that the appellant's claims were not mala fide.In conclusion, the Tribunal allowed the appeal, deleting the penalties imposed by the lower authorities and ruling in favor of the appellant based on the absence of concealment, furnishing of inaccurate particulars, and the minor nature of the discrepancies.