Tribunal cancels penalty for lack of clarity, ruling in favor of assessee.

The Tribunal ruled in favor of the assessee, finding that the penalty of Rs. 65,050/- under section 271(1)(c) of the Income Tax Act was unjustified due to lack of clarity in the penalty order and the deletion of the employer's penalty. The Tribunal held that since the penalty on the employer had been deleted, the penalty on the employee should also be deleted. As a result, the penalty was removed, and the assessee's appeal was allowed.

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Issues Involved:
1. Whether the Assessing Officer erred in levying a penalty of Rs. 65,050/- u/s 271(1)(c) of the Income Tax Act, 1961.
2. Whether there was inconsistency in the charge levied in the assessment order and the penalty order.
3. Whether the deletion of penalty on the employer (State Bank of India) under section 271C affects the penalty on the employee.

Summary:

Issue 1: Penalty under Section 271(1)(c)
The Tribunal noted that the Assessing Officer had levied a penalty of Rs. 65,050/- under section 271(1)(c) of the Income Tax Act, 1961, for furnishing inaccurate particulars of income. The penalty was based on the disallowance of Rs. 2,10,518/- claimed as Leave Travel Concession (LTC) exemption under section 10(5) of the Act, which pertained to travel outside India and was not permissible for exemption. The assessee contended that there was no malafide intention to conceal income as the details were disclosed based on Form No. 16 issued by the employer, State Bank of India.

Issue 2: Inconsistency in Charges
The assessee argued that there was inconsistency in the charges as the penalty was initiated for furnishing inaccurate particulars of income, but the penalty order mentioned both concealment of income and furnishing inaccurate particulars of income. The Tribunal observed that the penalty order did not specify the particular limb under which the penalty was levied, making it unclear whether it was for concealment of income or for furnishing inaccurate particulars. This lack of clarity was deemed sufficient to quash the penalty.

Issue 3: Impact of Deletion of Employer's Penalty
The Tribunal highlighted that the penalty levied on the State Bank of India (employer) under section 271C for non-deduction of TDS on the same LTC amount had been deleted by the Tribunal in earlier cases. It was noted that since the employer's penalty was deleted, the penalty on the employee should also be deleted. The Tribunal emphasized that the assessee, being an employee, had disclosed the details as per the Form No. 16 provided by the employer, and there was no concealment or inaccurate furnishing of particulars on the part of the assessee.

Conclusion:
The Tribunal concluded that the penalty of Rs. 65,050/- under section 271(1)(c) was not justified due to the lack of clarity in the penalty order and the deletion of the employer's penalty. Consequently, the penalty was deleted, and the appeal filed by the assessee was allowed. The order was pronounced on 04/09/2023 in the open court.

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