Penalty under section 271(1)(c) deleted as assessee did not furnish inaccurate particulars of income.

The Tribunal allowed the appeal, holding that the penalty imposed under section 271(1)(c) was unsustainable as the assessee did not furnish inaccurate particulars of income. The penalty of Rs.1,70,000 was deleted, and the appeal was allowed on 29/05/2023.

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Issues involved: Appeal against penalty imposed u/s. 271(1)(c) of the Income-tax Act, 1961 for assessment year 2015-16.

Summary:

Issue 1:Assessment of Penalty
The assessee appealed against the penalty imposed u/s. 271(1)(c) of the Act, which was confirmed by the National Faceless Appeal Centre (NFAC). The penalty of Rs.1,70,000/- was imposed based on the disallowance of Rs.5,00,000/- claimed as deduction by the assessee in the revised return of income.

Details: The assessee, a resident corporate entity, did not claim the penalty amount of Rs.5,00,000/- paid to SEBI in the original return of income. The Assessing Officer disallowed the deduction, initiating penalty proceedings u/s. 271(1)(c) and ultimately imposing a penalty of Rs.1,70,000/-. The assessee challenged the penalty imposition, but it was confirmed by the ld. Commissioner(Appeals).

Issue 2:Accuracy of Particulars of Income
The Tribunal considered whether the assessee furnished inaccurate particulars of income by claiming the deduction in the revised return, even though it was not claimed in the original return.

Details: The Tribunal observed that the assessee had disclosed the payment made to SEBI in the audit report and later claimed it as a deduction in the revised return. The Tribunal concluded that the assessee did not furnish inaccurate particulars of income, as the payment was disclosed in the audit report and the revised return.

Issue 3:Debatable Nature of Payment
The Tribunal discussed the debatable nature of the payment made to SEBI for violation of certain regulations, considering judicial precedents and the interpretation of Explanation 1 to section 37 of the Act.

Details: The Tribunal noted that there are judicial precedents suggesting that penalties paid for delays in obligations to regulatory bodies may not constitute an infringement of law. Citing relevant decisions, the Tribunal found that the penalty imposed in the present appeal was unsustainable, leading to the deletion of the penalty.

Conclusion:
The Tribunal allowed the appeal, holding that the penalty imposed u/s. 271(1)(c) was unsustainable, as the assessee did not furnish inaccurate particulars of income. The penalty of Rs.1,70,000/- was deleted, and the appeal was allowed on 29/05/2023.

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