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of <h1>Penalty under s.271(1)(c) quashed where officer's satisfaction cited inaccurate particulars but penalty alleged concealment deemed void for vagueness</h1> ITAT DELHI - AT set aside the penalty under s.271(1)(c), holding it unsustainable because the assessing officer inconsistently recorded satisfaction for ... Penalty levied u/s. 271(1)(c) - additions made by the AO on account of alleged accommodation entries received by assessee - HELD THAT:- The ambiguity in the mind of AO with regard to charge for levy of penalty u/s. 271(1)(c) is writ large. He has recorded satisfaction on the charge of “furnishing inaccurate particulars of income” and has levied penalty on the charge of “concealment of income”. As in the case of T. Ashok Pai [2007 (5) TMI 199 - SUPREME COURT] has held that the expression concealment of income and furnishing inaccurate particulars of income carry different connotations. Hence, these charges cannot be used interchangeably. It is no more res integra that where there is vagueness/inconsistency in mentioning charge for levy of penalty u/s. 271(1)(c) penalty levied is unsustainable. As in the case of CIT vs. Virgo Marketing P. Ltd. [2008 (1) TMI 885 - DELHI HIGH COURT] has held that levy of penalty has to be clear as to the limb for which it is levied and the position being unclear, penalty is not sustainable. Decided in favour of assessee. Appeal against CIT(A) order dated 29.02.2024 confirming penalty under s. 271(1)(c) for AY 2010-11. Delay of one day in filing the appeal was condoned. AO levied penalty in respect of additions of Rs. 7,50,000 allegedly on account of accommodation entries from M/s. Victory Software P. Ltd.; assessment passed u/s. 143(3) r.w.s. 263. AO recorded: 'I am satisfied that assessee has furnished inaccurate particulars of income of Rs.7,50,000/-.' Yet while imposing penalty the AO stated: 'The assessee has not furnished any evidence to the effect that the assessee has not concealed particulars of income. Accordingly it is held that penalty is leviable u/s.271(1)(c) for concealment of particulars of income.' Tribunal found this internal inconsistency fatal, noting that 'concealment of income' and 'furnishing inaccurate particulars of income' are distinct concepts (T. Ashok Pai) and that penalty must clearly identify the limb under s. 271(1)(c) (CIT v. Virgo Marketing). Penalty held unsustainable; impugned order set aside and appeal allowed.
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