Income Tax Penalty cannot be Imposed Unless Assessee Obliged in Law, Either acted deliberately in Defiance of Law or Guilty of Dishonest Conduct: ITAT [Read Order]

Income Tax Penalty - cannot be Imposed - Assessee - Obliged in Law - deliberately - Defiance of Law - Guilty - Dishonest Conduct - ITAT - Taxscan

The Income Tax Appellate Tribunal, Delhi bench held that the income tax penalty under section 271(1)(c) of the Income Tax Act, 1961 cannot be imposed unless assessee obliged in law, either acted deliberately in defiance of law or guilty of dishonest conduct or acted in conscious disregard of its obligation.

The Revenue approached the Tribunal against the order of the CIT(A) wherein it was held that that it is admitted position that the additions/disallowances made in the quantum assessments giving rise to the penalty in question in the respective appeals stood reversed by the Co-ordinate Bench of Tribunal in ITAs No.5037/Del/2016 and 5075/Del/2016 for Assessment Years 2008-09 and 2009-10, respectively.

Granting relief to the assessee, the Tribunal bench comprising Shri Saktijit Dey, Judicial Member & Shri Pradip Kumar Kedia, Accountant Member  held that the appeal moved by the Revenue on the ground that quantum appeal in favour of the assessee is subjected to challenge before the Jurisdictional High Court and thus not yet attained finality is devoid of any merit.

“As noticed, the Tribunal in the quantum proceedings has reversed the action of the Revenue. It is trite that penalty under Section 271(1)(c) is not automatically attracted merely because it is lawful to do so. The penalty is not ordinarily to be imposed unless assessee obliged in law, either acted deliberately in defiance of law or guilty of dishonest conduct or acted in conscious disregard of its obligation. The decision of the Tribunal in favour of the assessee implies absence of such possibilities. We thus decline to interfere with the order of the CIT(A),” the Tribunal said.

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Asst. Commissioner of Income Tax vs Aerens Buildwell Ltd

Counsel for Appellant:   Vivek Bansal

Counsel for Respondent:   Mayank Banga

CITATION:   2022 TAXSCAN (ITAT) 336

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