2022 (9) TMI 407 - AT - Income Tax

Tribunal restores penalty for income concealment under Tax Act

DCIT, Central Circle - 1 (4), Ahmedabad Versus M/s. KGN Industries Ltd.

The Appellate Tribunal allowed the Revenue's appeal and restored the penalty under section 271(1)(c) of the Income Tax Act for Assessment Year 2010-11. ... Penalty levied u/s. 271(1)(c) or u/s. 271F - assessee company failed to file Return of Income - assessee has not participated in the hearings anytime - None appeared on behalf of the assessee in today’s hearing as well as in previous hearing date - CIT(A) in his order held that the assessing officer ought to have invoked penalty provisions u/s. 271F for non filing of return of income and case does not cover under 271(1)(c) either concealment of income or furnishing inaccurate particulars of the income - HELD THAT:- The above observation of the Ld. CIT(A) is found to be not correct for the reason that in Para 5 of the penalty order, the A.O. has clearly mentioned that penalty proceedings for concealment of income initiated by way of issue of notice 274 r.w.s. 271(1)(c) - Similarly, in the penalty order, the assessing officer held that the assessee has willfully and deliberately concealed income by not filing the Return of Income. Therefore the assessee is liable for penalty u/s. 271(1)(c) read with Explanation 1 of the Act. As in the assessment order, the assessing officer also initiated penalty proceedings under 271F of the Act as well as u/s. 271B of the Act for not getting the books audited. The conclusion arrived by the Ld. CIT(A) is legally not correct and the same is hereby set aside and the penalty order passed u/s. 271(1)(c) by the Assessing Officer is hereby restored. This view of ours is further supported by producing the penalty order passed u/s. 271F by the Assessing Officer wherein he has levied a penalty of Rs. 5,000/- for not filing the Return of Income as per the Section 139(1) of the Act. The Assessing officer also hereby dropped penalty initiated u/s. 271B of the Act by order dated 24.08.2015. Appeal field by the Revenue is allowed. Issues Involved:1. Appeal against the order quashing penalty under section 271(1)(c) of the Income Tax Act for Assessment Year 2010-11.Detailed Analysis:1. Background and Initiation of Proceedings:The Revenue filed an appeal against the order quashing the penalty under section 271(1)(c) of the Income Tax Act for the Assessment Year 2010-11. The assessee, a Limited Company engaged in Trading in Agro-Commodities, received interest income but did not offer it for taxation or file the Return of Income. The case was reopened, notices were issued, and penalties were initiated under various sections.2. Assessee's Contentions and CIT(A) Decision:The assessee contended that the penalty was unjustified as the Assessing Officer (A.O.) was unclear about the defaults, and there was no concealment of income. The CIT(A) ruled in favor of the assessee, stating that the penalty under section 271(1)(c) was not justified as it was not a case of concealment of income. The CIT(A) highlighted that separate provisions existed for non-filing of the return of income under section 271F.3. Revenue's Grounds of Appeal:The Revenue appealed against the CIT(A)'s decision, arguing that the penalty under section 271(1)(c) was warranted due to the non-filing of the return of income and concealment of income. The Revenue contended that the A.O. correctly initiated penalty proceedings under section 271(1)(c) for concealment of income.4. Appellate Tribunal's Decision:The Appellate Tribunal noted that the assessee did not participate in the proceedings and upheld the penalty under section 271(1)(c) imposed by the A.O. The Tribunal disagreed with the CIT(A)'s reasoning, stating that the penalty for concealment of income was justified as per the assessment order and upheld the penalty order passed by the A.O.5. Conclusion:The Appellate Tribunal allowed the Revenue's appeal and restored the penalty under section 271(1)(c) of the Income Tax Act. The Tribunal emphasized that the penalty was correctly imposed for concealment of income due to the non-filing of the return of income, rejecting the CIT(A)'s view that the penalty under section 271F should have been invoked.This detailed analysis outlines the key aspects of the legal judgment concerning the appeal against the penalty under section 271(1)(c) of the Income Tax Act for the Assessment Year 2010-11.