The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) deleted the penalty under Section 271(1)(c) of the Income Tax Act, 1961 concluding there was no furnishing of inaccurate particulars of income or deliberate attempt to conceal the income.
Facts giving rise to the present appeal are that the assessee, Amitabha Sanyal, had filed his return of income in response to the notice issued under Section 148 of the Income Tax Act, declaring total income of Rs. 22,95,849.
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The case was selected for scrutiny assessment and the assessment under Section 147 and Section 143(3) of the Income Tax Act was framed on 19.11.2018 at Rs. 23,75,350 by making an addition of Rs. 79,500. The Assessing Officer initiated penalty proceedings under Section 271(1)(c) of the Act and imposed a penalty of Rs. 4,56,362 for concealment of income and furnishing inaccurate particulars.
The assessee contested the penalty order before the CIT(A), who dismissed the appeal, upholding the penalty imposed by the Assessing Officer.
Aggrieved by the order of the CIT(A), the assessee filed the present appeal before the Income Tax Appellate Tribunal, challenging the imposition of penalty under Section 271(1)(c) of the Act.
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However, the Tribunal observed that the AO had not recorded proper satisfaction in the assessment order that the assessee had concealed income or furnished inaccurate particulars of income.
The Tribunal ultimately deleted the penalty levied by the AO, holding that no penalty was imposable under Section 271(1)(c) of the Act, as the returned income and the assessed income were the same, excluding the compensation amount of Rs. 79,500, which was held to be a capital receipt.
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Thereafter, the assessee filed a Miscellaneous Application (MA) under Section 254(2) of the Act, which was allowed vide order dated 23.08.2023, recalling the earlier order dated 13.03.2023 and restoring the appeal to its original number.
During the appeal proceedings, the assessee relied on the decision of the Tribunal in the case of Smt. Delilah Raj Mansukhani Vs. ITO , wherein it was held that compensation received for alternative accommodation is not liable to tax.
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The Tribunal relied on the decision of the Hon’ble Supreme Court in the case of Varkey Chacko v. CIT [1993], which held that a penalty for concealment of particulars of income or for furnishing inaccurate particulars of income can be imposed only when the assessing authority is satisfied that there has been such concealment or furnishing of inaccurate particulars.
The bench observed that the penalty under section 271(1)(c) of the Act cannot be levied merely because the assessee had filed its return of income in response to a notice issued under section 148 of the Act, without any finding of concealment or inaccuracy in the particulars of income furnished by the assessee.
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The two-member bench of the tribunal comprising Pradip Kumar K Choubey (Judicial Member) and Rakesh Mishra (Accountant Member) noted that the assessee had filed the return of income in response to the notice issued under section 148 of the Act, and there was no furnishing of inaccurate particulars of income or deliberate attempt to conceal income.
The rigors of the provisions of section 271(1)(c) are clearly not attracted in this case. In view thereof, the penalty levied under Section 271(1)(c) of the Income Tax Act of Rs. 4,56,362 was deleted. The grounds of appeal are ruled in favour of the assessee. Accordingly, the appeal of the assessee is partly allowed.
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