2025 (12) TMI 283 - AT - Income Tax

Penalty u/s 271(1)(c) deleted as no income assessed beyond return; concealment charge held legally unsustainable

The ITAT Chandigarh allowed the assessee's appeal and deleted the penalty levied u/s 271(1)(c). It held that since the AO had accepted the returned income ... Levy of penalty u/s 271(1)(c) - AO has accepted the returned income declared by the assessee - HELD THAT:- We are of the view that FAA has failed to take cognizance of this assessment order while deciding the penalty appeal. The penalty ought to have been deleted because no addition has been made to the total income of the assessee. If an assessee is required to pay taxes on an addition made during the course of assessment, over and above the declared income, then such penalty would be calculated according to the above sub-clause (iii). In the present case, there is no addition made to the income of the assessee on which it can be alleged that assessee has evaded the taxes by reason of concealment of particulars of income or furnishing of inaccurate particulars. This charge is no more available against the assessee. Accordingly, no penalty could be computed upon the assessee. We allow the appeal of the assessee and delete the penalty. The assessee appealed against confirmation of penalty under section 271(1)(c) for A.Y. 2014-15. Originally, the return declared income of ?62,43,060, which was assessed under section 143(3) at ?1,09,53,555, leading to penalty at 200% (?32,49,546), later reduced by the CIT(A) to ?16,24,773. The original assessment was challenged and set aside by the Tribunal, and in the consequential fresh assessment under section 143(3) read with section 254, dated 27.02.2024, the Assessing Officer accepted the returned income without making any additions. The Tribunal held that once the reassessment determined income equal to the returned income, there remained no basis for alleging 'concealment of particulars of income' or 'furnishing inaccurate particulars of income.' Referring to section 271(1)(c) read with clause (iii), it emphasized that penalty is linked to 'the amount of tax sought to be evaded.' As there was no addition and thus no tax sought to be evaded, the penalty was unsustainable and was deleted.