ITAT Deletes Penalty U/S 271(1) (c) On Assessee in Absence of Concealment or Inaccurate Particulars of Income [Read Order]

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) deleted the penalty under Section 271(1) (c) of the Income Tax Act on the assessee in the absence of concealment or inaccurate particulars of income.

The Assessee, Babita Khurana is a resident carrying on business in the trading of auto parts. Assessee had filed original returns of income in regular course declaring total income of Rs. 4,70,590/- and Rs. 11,96,610/-, for the assessment years 2008-09 and 2011-12, respectively.

Subsequently, a search and seizure operation was conducted on the assessee. In response to the notices issued under Section 153A of the Income Tax Act 1961, the assessee filed returns of income revising total income to Rs.3,44,36,586/- and Rs.82,90,606/- for the assessment years 2008-09 and 2011-12.

The Assessing Officer completed the assessments under section 143(3)/153A of the Income Tax Act, 1961 accepting the income declared by the assessee in the returns of income filed in pursuance to notices issued under Section 153A of the Income Tax Act, 1961.

However, alleging that the assessee has filed inaccurate particulars of income or concealed her income, the assessing Officer initiated proceedings for imposition of penalty under Section 271(1)(c) of the Income Tax Act and ultimately passed orders imposing a penalty of Rs.1,16,43,250/- in the assessment year 2008-09 and Rs.24,08,327/- in the assessment year 2011-12. Though the assessee challenged the orders imposing penalty under Section 271(1) (c) of the Income Tax Act, 1961 by filing appeals before CIT (A), however, she was unsuccessful.

Counsel for the assessee submitted that the penalty order passed by the assessing officer is invalid, Assessing Officer has not referred to any incriminating material found during the search and seizure operation indicating concealment of income by the assessee.

The Assessing Officer has not mentioned the specific limb under which he intended to levy a penalty.no dispute that in response to a notice issued under Section 153A of the Income Tax Act 1961, the Assessee had filed revised returns of income declaring more income than what was declared in the original returns of income.

The tribunal bench of the Judicial Member Saktijit Dey and the AccountantmMmber Dr B.R.R. Kumar observed that in the course of assessment proceedings, the Assessing Officer made thorough verification of the returns of income and ultimately accepted the income declared by the assessee.

In other words, in the assessment orders, the assessing officer has not made any variation to the income declared by the assessee. It is further observed while completing the assessments, the assessing officer has initiated proceedings for imposition of penalty under Section 271(1)(c) of the Income Tax Act, 1961. The penalty order also does not specifically indicate the exact limb under which the Assessing Officer imposed a penalty.

The Revenue has failed to establish either concealment of income or filing of inaccurate particulars of income by the assessee. It is observed while considering the identical issue of a penalty imposed under Section 271(1)(c) of the Income Tax Act in Assessee’s own case in the assessment year 2010-11, the Tribunal has deleted the penalty having found that there is neither concealment of income nor furnishing of inaccurate particulars of income.

The Tribunal deleted the penalty imposed under Section 271(1) (c) of the Income Tax Act in both the assessment years and both appeals were allowed.

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