Penalty u/s 271(1)(c) of the Income Tax Act is impossible Only When Furnishing of Inaccurate Particulars was Proven: Delhi HC [Read Order]

The Delhi High Court penalty under section 271(1)(c) of the Income Tax Act, 1961 is impossible only when the furnishing of inaccurate particulars was proven. It was viewed that a case is made out under Section 271(1)(c) of the Act, he needs to indicate, clearly, as to which limb of the said provision is attracted.           

The appellant/revenue challenged the order passed by the Income Tax Appellate Tribunal [“Tribunal”]. The Tribunal, via the impugned order, had set aside the findings of the Commissioner of Income Tax (Appeals) [“CIT(A)”] and directed the Assessing Officer (AO) to delete the penalty amounting to Rs. 7,99,90,570/-. 

The reason given by the Tribunal in setting aside the order of the CIT(A) was that the AO while initiating penalty proceedings under Section 271(1)(c) of the Act, should have alluded to the limb under which penalty is proposed to be levied. 

In other words, the AO should have stipulated as to whether the penalty was proposed to be imposed on M/S Blackrock Securities Pvt Ltd, the respondent/assessee for concealment of particulars of its income, or furnishing inaccurate particulars. 

In the impugned order, the Tribunal noted that “Since the above additions were treated as concealment of income/furnishing inaccurate particulars of income by the assessee, a notice u/s: 274 r.w.s. 271 (1)(c) of the Income Tax Act 1961 dated 28.12.2016 and 14.06.2017 were issued and duly served -upon the assessee company. The AR of the assessee company filed its reply to the notice vide letter dated 23.06.2016. The penalty proceedings u/ s 271(1) (c) are decided based on the income tax provisions, judicial pronouncements and the material available on record and the submission of the assessee.”

The Tribunal has allowed the appeal filed by the Assessee holding the notice issued by the Assessing Officer under Section 274 read with Section 271(1)(c) of the Income Tax Act, 1961 ( 'the Act') to be bad in law as it did not specify which limb of Section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e., whether for concealment of particulars of income or furnishing of inaccurate particulars of income.

A division bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia observed that a case is made out under Section 271(1)(c) of the Act, he needs to indicate, clearly, as to which limb of the said provision is attracted. The reason we say so is, that apart from anything else, the pecuniary burden may vary, depending on the infraction(s) committed by the respondent/assessee. The Court closed the appeal.

To Read the full text of the Order CLICK HERE

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