The Income Tax Appellate Tribunal ( ITAT ) Pune Bench, has recently, in an appeal preferred before it by the revenue, held that once the income is declared and the return is filed, later, the Assessing Officer (AO) is not justified in further imposing a penalty under section 271(1)(c) of the Income-tax Act, 1961.
The aforesaid observation was made by the tribunal when the Revenue had filed an appeal against the order of the Commissioner of Income Tax (Appeals)-8, Pune, dated 10-05-2018 for the Assessment Year 2013-14.
The only grievance of the Revenue being the deletion of penalty u/s 271(1)(c) by the Commissioner of Income Tax (Appeals), (CIT(A)), the submission of the D.R was that despite the assessee declaring his income during the survey and subsequently offering the same for taxation in the return of income, the A.O has still imposed penalty though this is not a case for any penalty imposition u/s 271(1)(c) of the Act.
Hearing the contentions of either side, considering the facts and circumstances of the case, perusing the materials on record ,the Tribunal thus observed:
“We are of the considered view after hearing the submissions of the ld. D.R and perusing the material on record that once the income has been declared and filed in the return of income, the A.O is not justified further to impose penalty on such declared income since there is no loss occurred to the Revenue. The penalty u/s 271(1)(c) of the Act is leviable if the A.O is satisfied in the course of any proceedings under this Act that any person has concealed the particulars of his income or furnished inaccurate particulars of such income.
It is a certain position that assessment proceedings and penalty proceedings are separate and distinct and as held by Hon’ble Supreme Court in the case of Anantharam Veerasinghaiah & Co. Vs. CIT (1980) 123 ITR 457 (SC), the findings in the assessment proceedings cannot be regarded as conclusive for the purpose of the penalty proceedings. It is also well settled that the criteria and yardstick for the purpose of imposing penalty u/s 271(1)(c) are different than those applied for making or confirming the addition.
It is hence, necessary to re-appreciate and re-consider the matter so as to find out as to whether the addition or disallowance made in quantum proceedings actually represent the concealment on the part of the assessee as envisaged u/s 271(1)(c) of the Act and whether it is a fit case to impose penalty by invoking the said provision.
Therefore, it is incumbent upon the revenue authorities to arrive at a satisfaction whether it is a particular case for imposition of penalty u/s 271(1)(c) of the Act. The penalty cannot be imposed in a methodological manner but it can only be imposed if it is required in the facts and circumstances of the case suggesting and confirming any concealment or furnishing of inaccurate particulars of income by the assessee.”
“In view of the above, we hold that the order of the CIT(A) in deleting the penalty cannot be faulted with. The grounds raised by the Revenue are dismissed.” – dismissing the Revenue’s appeal the bench concluded.
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