2022 (2) TMI 1031 - AT - Income Tax

ITAT Delhi Upholds Deletion of Penalty under Income Tax Act

The A.C.I.T. Circle 2 (2) New Delhi Versus M/s Ansal Properties and Infrastructure Ltd.

The A.C.I.T. Circle 2 (2) New Delhi Versus M/s Ansal Properties and Infrastructure Ltd. - TMI Issues:1. Deletion of penalty imposed under section 271(1)(c) of the Income Tax Act.2. Validity of penalty proceedings initiated by the Assessing Officer.Detailed Analysis:1. Deletion of Penalty:The appeal before the Appellate Tribunal ITAT Delhi involved the deletion of a penalty amounting to Rs. 1,71,40,000 imposed by the Assessing Officer under section 271(1)(c) of the Income Tax Act. The Commissioner of Income Tax (Appeals) had deleted the penalty after considering the facts and submissions. The appellant contended that the taxability of ALV (actual letting value) was a highly debatable issue, and the assessee had taken a plausible view, which should not be considered as concealment of income or furnishing inaccurate particulars of income. The Tribunal noted that historically, the Assessing Officer, CIT(A), and Tribunal had been inconsistent in their treatment of ALV, with the High Court deciding against the assessee only in 2012, while the SLP was pending before the Supreme Court. The Tribunal agreed with the CIT(A) that since the assessee had taken a plausible view, there was no concealment of income, leading to the dismissal of Ground No. 1.2. Validity of Penalty Proceedings:The second issue revolved around the validity of the penalty proceedings initiated by the Assessing Officer. The appellant challenged the penalty on the grounds that the notice did not specify under which limb of section 271(1)(c) the penalty was leviable. Citing relevant case law, the Tribunal upheld that a notice failing to specify the exact limb of the section under which penalty proceedings were initiated would be bad in law. The Tribunal referred to decisions by the High Courts of Delhi and Karnataka, emphasizing the importance of clearly specifying whether the penalty was for concealment of particulars of income or furnishing inaccurate particulars of income. In line with these precedents, the Tribunal dismissed Ground No. 2, affirming the dismissal of the appeal and upholding the deletion of the penalty.In conclusion, the Appellate Tribunal ITAT Delhi dismissed the appeal of the Revenue, confirming the deletion of the penalty and emphasizing the importance of clarity in specifying the grounds for initiating penalty proceedings under section 271(1)(c) of the Income Tax Act.