TaxTMI 
TaxTMI 
2020 (4) TMI 259
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....e action of the AO in imposing penalty u/s 271(1)( c) of the I.T. Act, 1961 amounting to Rs. 38,516/-. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the said penalty u/s 271(1)( c).'' 2.1 Brief facts of the case are that the assessee filed its return of income and subsequently assessment u/s 143(3) of the I.T. Act, 1961 was completed and addition was made by the AO on account of interest on FDR of Rs. 1,13,318/-.The said order of the AO was sustained uptill ITAT. Therefore, the penalty proceedings were also initiated and consequently penalty of Rs. 38,516/- was imposed by the AO u/s 271(1)(c) of the Act on account of concealment of inco....
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....(1)(c) of the Act give discretionary powers to the authority. levying penalty, to levy or 1701 to levy penalty in the case of concealment of income or furnishing inaccurate particulars of income. 3.6 Hon'ble Supreme Court in the case Hindustan Steel Ltd. v. State of Orissa [1972J 83 ITR 26 (SC) laid down a ratio that penalty should not be imposed merely because it is lawful to do so. The Assessing Officer has to exercise his discretion judiciously. An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest.....
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....levant extract of penalty order is as under: "The assessee filed its return of income on 28.09.2009 declaring total income of Rs. I,33,47,510/- .Assessment u/s 143(3) of the IT Act was completed on 28,12.20.11 at total income of Rs. 1,53.08.400A-. w'hile completing the assessment u/S 143(3) following addition was made by the A.0. Interest on EDR: Rs, 1,13,318/- .During the assessment proceedings, on perusal the 26AS statement of the assessee it was found that the assessee had received interest from State Bank Of India amounting of Rs. 6,57,670/- whereas the assessee, in its return of income had declared interest of Rs. 5,44,352/- * Thus the assessee had declared less amount of Rs. 1,13,318/- on interest of Rs. 5,44,352....
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....-tax Act, 1961 says that............. Provided that in the case where the relevant assessment or other order is the subject-matter of an appeal to the Commissioner (appeals) under section 246 or section 246A, and the commissioner (Appeals) passes the order on or after the 1St day of June, 2003 disposing of such appeal , cm order imposing penalty shall he passed before the expiry of the financial year in which the proceedings, in the course of which action for imposition of penalty has been initiated, are completed, or within one year ,from :the end of the financial year in which the order of the commissioner (appeals) is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. wh....
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....els of the assessee and perusing the materials available on record, we found that the assessee was maintaining its account on accrual basis which requires estimating the accrued income by way of interest on unmatured fixed deposit. As per the assessee, this estimation can be at variance with the working of the bank and such variance over the total period of maturity of fixed deposit will ultimately get neutralized. The assessee had been adopting this method of calculation in previous years also and even the auditor of the assessee had never objected. We are of the view that as per facts of the present case since the assessee was maintaining multiple accounts and was estimating the accrual income by way of interest on unmatured Fixed deposit....