Revenue's appeal dismissed as penalty under section 271(1)(c) deleted for inaccurate income particulars disclosure

ITAT Bangalore dismissed revenue's appeal against penalty deletion under section 271(1)(c) for inaccurate income particulars. Assessee had not disclosed non-eligibility of brought forward losses in return, but ITAT held no penalty was warranted as assessee voluntarily paid additional tax with interest before assessment proceedings commenced. The disallowance arose from subsequent MAP order affecting loss carry-forward eligibility, not from concealment at time of filing return. ITAT found assessee's explanation bona fide and agreed with CIT(A) that conditions for penalty under section 271(1)(c) were not satisfied.

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Issues Involved:
1. Deletion of penalty levied u/s 271(1)(c) of the Income Tax Act, 1961.
2. Non-reporting of revised entitlement of set off of brought forward losses.

Summary:

Issue 1: Deletion of Penalty Levied u/s 271(1)(c)

The Revenue appealed against the order of the CIT(A) deleting the penalty of Rs. 1,78,30,779/- levied by the AO u/s 271(1)(c) for the Assessment Year 2016-17. The facts leading to the penalty involved the Assessee filing a revised return on 25.05.2017 due to changes in carried forward losses from rectification and MAP orders for AYs 2009-10 and 2011-12. After receiving another MAP order for AY 2012-13 on 10.05.2018, the Assessee prepared revised computations and paid additional tax of Rs. 96,39,172/- on 30.05.2018 but could not file another revised return as the time limit had lapsed on 31.03.2018. The AO, without considering the tax paid voluntarily, passed an order u/s 143(3) on 17.12.2018, making additions and initiating penalty proceedings for furnishing inaccurate particulars of income. The CIT(A) deleted the penalty, noting that the disallowance arose from the MAP order received after the time limit for filing a revised return had expired and that the Assessee had acted in a bona fide manner by paying the additional taxes voluntarily.

Issue 2: Non-reporting of Revised Entitlement of Set Off of Brought Forward Losses

The Revenue argued that the Assessee furnished inaccurate particulars by not reporting the revised entitlement of set off of brought forward losses. The Tribunal noted that the Assessee had filed a revised return on 25.05.2017 due to changes from rectification and MAP orders for AYs 2009-10 and 2011-12 and paid additional taxes voluntarily on 30.05.2018 after receiving the MAP order for AY 2012-13. The Tribunal found that the disallowance arose from the MAP order received after the statutory time limit for filing a revised return had expired, and the Assessee had acted in a bona fide manner. The Tribunal held that the conditions u/s 271(1)(c) must exist before imposing a penalty and that merely agreeing to the addition and paying taxes does not imply furnishing inaccurate particulars of income. The Tribunal confirmed the CIT(A)'s decision to delete the penalty.

Conclusion:

The appeal filed by the Revenue was dismissed, and the order of the CIT(A) deleting the penalty levied u/s 271(1)(c) was confirmed. The Tribunal found no infirmity in the CIT(A)'s decision, noting the Assessee's bona fide actions and voluntary payment of additional taxes. The order was pronounced in the open court on 29th May, 2024.

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