The Pune bench of the Income Tax Appellate Tribunal (ITAT) has held that penalty u/s 271 can’t be invoked in the absence of relevant records about the inaccurate particulars.
The appellant is a company engaged in the business of manufacturing and sale of chemicals. The return of income was filed on 24.09.2012 declaring a total income of Rs.2,08,86,861/-. The Assessing Officer passed order u/s 143(3) of the Income Tax Act, 1961 at a total income of Rs.2,13,79,180/- after making disallowance of Rs.3,66,172/- on account of group gratuity payment and disallowance of Rs.1,26,142/- on account of prior period expenses. The Assessing Officer issued a show-cause notice stating the penalty proceedings u/s 271(1)(c) and the assessee replied stating that the addition was based on the admission made during the course of assessment proceedings and it was a mere bonafide mistake.
The assessee contended that there was no deliberate intention to conceal the prior period expenses. The AO rejected the contention of the assessee and levied a penalty of Rs.41,000/- u/s 271(1)(c) of the Act. On appeal, the levy of penalty was confirmed by CIT(A) rejecting the contention of the appellant that the Assessing Officer had failed to record the satisfaction by taking the relevant limb of the show-cause notice. The revenue in contra contended that the addition was agreed by the assessee during the course of assessment proceedings on a query posed by the Assessing Officer
It was observed that the penalty was levied for furnishing the inaccurate particulars of income in respect of the addition of prior period expenses of Rs.1,26,142/-. The tribunal observed that the Assessing Officer had failed to give a finding as to what kind of particulars filed by the assessee is found to be inaccurate or false.
The Coram consists of Shri Inturi Rama Rao, AM and Shri Partha Sarathi Chaudhury, JM observed that the addition was made based on the information filed by the assessee without any finding recorded and directed the Assessing Officer to delete the penalty of Rs.41,000/- levied u/s 271(1)(c) of the Act. The appeal filed by the assessee was allowed. The assessee was represented by Shri Pramod S. Shingte the revenue was represented by Shri S. P. Walimbe.
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