ITAT: No Penalty Levy U/S 271(1)(c) After Income Reported via ITR

In the recent appeal by the petitioner to The Income Tax Appellate Tribunal ( ITAT ) Pune Bench, stated that the revenue preference earlier held the income declaration along with the filed return can be understood against the Assessing Officer (AO) without any justification for the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961.

The statement was held in the observation of the tribunal which had seen the revenue filed by the appellant against Commissioner of Income Tax (Appeals)-8, Pune, dated 10-05-2018 for the Assessment Year 2013-14. order.

The penalty deletion for the revenue grievance u/s 271(1)(c) by the Commissioner of Income Tax (Appeals), (CIT(A)), the DR submission was doing even the assessee declared the income within the survey and further advanced the process for the income return taxation and when the AO imposed the penalty which is not justifiable u/s 271(1)(c) of the Act.

When considering both parties the circumstances and the facts were all based on the material of the case and further the tribunal mentioned that, the hearing submissions of the ld. D.R completely read the contradictory materials and mentioned that the income once declared as well as filed in the income return, the AO isn’t justifiable to impose a penalty on the income declared. As there is no loss to the revenue. Also if the satisfaction is received by the AO then the penalty is leviable u/s 271(1)(c) of the Act and the proceedings can be done.

The statement also mentioned, ” 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 penalty proceedings. It is also well settled that the criteria and yardstick to impose penalty u/s 271(1)(c) are different from those applied for making or confirming the addition.

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“It is hence, necessary to re-appreciate and re-consider the matter to find out as to whether the addition or disallowance made in quantum proceedings 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 a 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 methodologically 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.”

“Given the above, we hold that the order of the CIT(A) in deleting the penalty cannot be faulted. The grounds raised by the Revenue are dismissed.”