ITAT quashes Penalty Order u/s 271(1) (c) for "Lack of Clarity in Particulars" [Read Order]

The New Delhi bench of the Income Tax Appellate Tribunal (ITAT) recently quashed the penalty order under Section 271(1)(c) of the Income Tax Act for lack of clarity in particular.

The Assessing Officer passed a penalty order under Section 271(1)(c) of the Income Tax Act and imposed a penalty of Rs.4,63,500/- concerning Assessment Year 2013-14; Rs.3,70,800/- for Assessment Year 2014-15; Rs.2,16,300/- for Assessment year AY 2015-16 and Rs.92,700/- for Assessment Year 2016-17 in appeal.  The appeal has challenged the imposition of penalty under Section 271(1)(c) of the Income Tax Act for different assessment years of different amounts.

The assessee Gawar Constructions Co. Pvt. Ltd raised multiple objections on the imposition of penalty. One of the objections borne out on behalf of the assessee is that while the satisfaction has been drawn towards concealment of particulars of income in the course of the assessment proceedings, the corresponding penalty has been eventually imposed on the grounds of furnishing of inaccurate particulars of income in so far as AY 2013-14 is the concern. Likewise, AYs 2014-15, 2015-16 and 2016-17, initially satisfaction has been drawn by the Assessing Officer in the course of the assessment proceedings towards concealment of particulars of income.

The bench consisting of  two members, the Judicial Member Chandra Mohan Garg and the Accountant Member Pradip Kumar Kedia observed that based on this satisfaction, the notice under Section 274 read with Section 271(1)(c) of the Income Tax Act was issued. However, the penalty has been imposed on the grounds of furnishing inaccurate particulars of income. Thus, the basis for drawing satisfaction under Section 271(1B) of the Income Tax Act and the actual basis for imposition of penalty are quite different.

The impugned action of the Assessing Officer for imposition of penalty on a different ground than the ground on which the satisfaction was drawn, is wholly untenable in law, the Bench observed.

Consequently, the impugned penalty orders passed by the Assessing Officer were set aside as per the decision in the case Hatis Prabhu Das Chaudhary vs. ITO and the penalty imposed under Section 271(1)(c) of the Income Tax Act was canceled.

In the result, the appeal of the assessee was allowed.

To Read the full text of the Order CLICK HERE

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