The Dehradun bench of the Income Tax Appellate Tribunal ( ITAT) held that the penalty imposed under section 271(1)(c ) of the Income Tax Act,1961 without proving either concealment of income or filing of inaccurate particulars of income is invalid.
Saraswati Dynamics Pvt. Ltd, the appellant assessee filed the appeal against the order passed by the Commissioner of Income Tax (Appeals) for confirming the addition made by the assessing officer without specifying the reason for the addition.
Hemant Arora and Pavitra H. Arora, the counsels for the assessee contended that the imposition of penalty under section 271(1)(c) of the Income Tax Act was without proving either the concealment of income or filing of inaccurate particulars of income. It was also submitted that the issuance of notice by the assessing officer for the assessment also does not specify the specific default for which penalty notice has been issued.
Mayank P. Tomar, the counsel for the revenue contended that the levy of penalty under section 271(1)(c ) of the Income Tax Act by the assessing officer was according to the provision prescribed by the law.
The two-member bench comprising Saktijit Dey (Judicial) and Dr B. R. R. Kumar (Accountant) held that based on various decisions of the High Court the assessing officer had not been specified under section 274 of the Income Tax Act as to whether the penalty was proposed for alleged ‘concealment of income’ or ‘furnishing of inaccurate particulars of such income’ and are liable to be deleted.
It was also observed that Section 271(1)(c) of the Income-tax Act prescribes two faults or omissions which expose the assessee to concealment penalty and they are, concealment of particulars of income and furnishing inaccurate particulars of such income while allowing the appeal filed by the assessee.
Recently in a case, the Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) has held that Section 271(1)(c) of the Income Tax Act penalty cannot be imposed on a debatable issue and the Tribunal held that once there was a debatable issue then the assessee was not liable for penalty under section 271(1)(c) of the Income Tax Act.
Read More: Relief to Nagarjuna Oil Corporation, Section 271(1)(c) Penalty cannot be imposed on debatable issue: ITAT
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