Penalty under IT Act 271(1)(c) for M/s. IRIS Engineering Industries Pvt. Ltd. set aside by ITAT Chennai

The Appellate Tribunal ITAT Chennai set aside the penalty imposed under section 271(1)(c) of the Income Tax Act for the assessment year 2012-13 on M/s. IRIS Engineering Industries Pvt. Ltd. The Tribunal found the penalty proceedings questionable due to the invalidity of the assessment order, which was revised by the ld. PCIT. Consequently, the penalty appeal was deemed irrelevant, and the matter was remitted back to the Assessing Officer for further action following the revision order. The penalty was ultimately set aside, and the appeal was allowed for statistical purposes.

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Issues:
Levy of penalty under section 271(1)(c) of the Income Tax Act, 1961.

Detailed Analysis:
1. The appeal was against the order confirming the penalty under section 271(1)(c) of the Act for the assessment year 2012-13. The assessee, M/s. IRIS Engineering Industries Pvt. Ltd., did not file a return of income within the allowed period. A survey revealed the sale of property to M/s. Lakshmi Machine Works Ltd. The Assessing Officer determined long term capital gains. Penalty proceedings were initiated due to non-filing of return. The assessee contended that the income was disclosed after the survey, and there was no intention to conceal income.

2. The Assessing Officer rejected the plea, stating it was a statutory obligation to disclose income timely. The penalty was imposed, considering the Supreme Court judgment in MAK Data P. Ltd. v CIT. The CIT(A) upheld the penalty, emphasizing that the assessee failed to disclose capital gains in the return. The assessee's argument of voluntary approach to the tax department was dismissed.

3. The Tribunal noted that the assessment order was set aside by the ld. PCIT, making the penalty proceedings questionable. The ld. Counsel argued that the penalty order was invalid due to the assessment's invalidity. The Tribunal observed that the assessment was revised by the PCIT, rendering the penalty appeal irrelevant. The matter was remitted back to the Assessing Officer for necessary action post the PCIT's revision.

4. The revision order under section 263 upheld by the Tribunal rendered the penalty appeal inconsequential. The penalty levied by the Assessing Officer was set aside, and the matter was remitted back for further action post the revision order. The appeal was allowed for statistical purposes.

This detailed analysis covers the issues related to the levy of penalty under section 271(1)(c) of the Income Tax Act, 1961, as per the judgment delivered by the Appellate Tribunal ITAT Chennai.

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