Appeals consolidated, penalties deleted by ITAT DELHI for section 271(1)(c) violations

The Appellate Tribunal ITAT DELHI heard four appeals by the assessee challenging penalty orders under section 271(1)(c) of the Act for different assessment years. The Tribunal consolidated the appeals due to common issues regarding penalty imposition related to the nature of the assessee's business. Upon review, discrepancies in the AO's approach were identified, leading the Tribunal to conclude that penalties were unwarranted. The Tribunal directed the AO to delete the penalties, allowing the assessee's appeals.

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Issues: Appeal against penalty under section 271(1)(c) of the Act for A.Y. 2013-14 to 2016-17.

Summary:
The Appellate Tribunal ITAT DELHI heard four separate appeals by the assessee against the orders of the CIT(A)-24, New Delhi, pertaining to different assessment years. The common grievance in all appeals was the levy of penalty under section 271(1)(c) of the Act, although the quantum of penalty varied each year. The Tribunal considered the identical underlying facts in all appeals and decided to dispose of them together for convenience. The appeals revolved around the nature of the assessee's business, which involved providing accommodation entries to beneficiaries.

During the assessment, the AO accepted the commission received by the assessee but disallowed 25% of the claimed expenses due to lack of evidence. Subsequently, penalty proceedings were initiated for concealing income, and the penalty was levied at 100% of the tax on the income sought to be evaded by furnishing inaccurate particulars. Upon review, the Tribunal found discrepancies in the AO's approach. It noted that the penalty was imposed for furnishing inaccurate particulars, despite the initial penalty proceedings being for concealment of income. Additionally, the AO's allowance of 75% of the expenses indicated satisfaction with their genuineness, raising questions about the penalty imposition on the remaining disallowed amount.

After careful consideration of the assessment order, penalty levy, and the first appellate authority's decision, the Tribunal concluded that the cases were not suitable for penalty under section 271(1)(c) of the Act. Therefore, the AO was directed to delete the penalty, and the appeals of the assessee were allowed. The order was pronounced in open court on 18.09.2023.

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