2022 (8) TMI 846

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.... 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the penalty ignoring the provisions of sec. 27i(i)(c) of the Act. The appellant prays that the order of the CIT(A) on the above ground be set aside and that of the DCIT 9(3X2) be restored. The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary." 2. Briefly stated facts necessary for adjudication for the controversy are that; on the basis of assessment framed under section 143(3) of the Act by making disallowance of Rs.5,33,08,153/- and Rs.9,58,000/- under section 40(a)(ia) of the Act and on account of prior period expenses respectively, Assessing Officer initiated the penalty proceedings against the assessee by way of issuance of notice under section 274 read with section 271(1)(c) of the Act. Declining the contentions raised by the assessee the Assessing Officer proceeded to levy the penalty to the tune of Rs.1,85,000/- @ 100% of the tax sought to be evaded under section 271(1)(c) of the Act. 3. Assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has partly allowed the same. Feeling aggriev....

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....? 9. The Ld. D.R. for the Revenue, challenging the impugned order passed by the Ld. CIT(A), contended inter alia that the assessee company has intentionally concealed its income by furnishing inaccurate particulars of income by claiming inadmissible amount under section 40(a)(ia) of the Act despite being pointed out by "tax audit report" and that assessee company has also debited prior period expenses of Rs.9,58,000/- on account of electricity expenses again despite being pointed out in "tax audit report" and relied upon the assessment order as well as penalty order passed by the Assessing Officer. 10. However, on the other hand, the Ld. A.R. for the assessee, in order to repel the argument addressed by Ld. D.R. for the Revenue, relied upon impugned order passed by Ld. CIT(A) and contended inter alia that initiation of the penalty proceedings by way of issuance of notice under section 274 read with section 271(1)(c) of the Act is bad in law as the assessee has not been made aware of as to whether he was being penalized for concealing the particulars of income or for furnishing inaccurate particulars of such income and drew our attention towards the notice of penalty available....

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....he details supplied in the return must not be accurate, not exact or correct, not according to the truth or erroneous. Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars." 12. Not only this, AO at the time of initiating the penalty proceedings during framing assessment order has failed to apply his mind as he was not clear enough as to whether he is initiating the penalty proceedings for furnishing inaccurate particulars of income or for concealing the particulars of income rather invoked both the limbs of section 271(1)(c) of the Act. Operative part of the assessment order initiating the penalty proceedings is extracted as under for ready reference: "Penalty proceedings u/s. 271(1)(c) are initiated separately for furnishing inaccurate particulars of income and for concealing....

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....s the entire process is revenue neutral. So in this case also when the assessee company is suffering huge losses no motive can be attributed to it. When there is no intention of the assessee to gain by making inadmissible claim penalty proceedings are not attracted as it appears to be a bonafide mistake. Even otherwise Assessing Officer has not brought on record any evidence if the assessee has claimed bogus, false or ingenuine expenses rather blindly relied upon the "tax audit report" without recording his satisfaction and as such penalty levied by AO is not sustainable. 19. In view of what has been discussed above we are of the considered view that penalty levied by Assessing Officer has been rightly deleted by Ld. CIT(A), hence finding no illegality of perversity in the impugned order passed by Ld. CIT(A). Present appeal filed by the Revenue is hereby dismissed. Order pronounced in the open court on 19.01.2022. ============= Document 1 सेवा में / NOTICE UNDER SECTION 274 READ WITH SECTION 271 OF THE INCOME TAX ACT, 1961 PAN: AABCF1008K. To, M/S. FUTURE-E-COMMERCE INFRASTRUCTURE LTD. KNOWLEDGE HOUSE, SHYAM NAGA....

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....¥‡ अन्दर और उक्त धारा 139(1) या इस प्रकार की सूचना द्वारा अपेक्षित नीति से विवरणी नहीं दी है। ता. Have without reasonable cause failed to furnish me return of income which you were required to furnish by a notice given under Section 139 (2) / 148 of the Income Tax Act, 1961 No....... dated ............. or have without reasonable cause failed to furnish it within the time allowed and the manner required by the said Section 139(1) or by such notice. • बिना उचित कारण के आपने भारतीय आयकर अधिनियम, 1922 की धारा 22(4) /23 (2) या आयकर अधà¤....