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Facts
The assessee, a society, filed a Nil income return, but during scrutiny, additions were made for corpus donation and vehicle sale proceeds, leading to an assessment of Rs. 59,95,702/-. A penalty under Section 271(1)(c) was levied by the AO for furnishing inaccurate particulars, which was confirmed by the CIT(A). The assessee contended that the additions were admitted for clarity and a rectification order showed Nil tax demand, thus no concealment or inaccurate particulars were furnished.
Held
The Tribunal found that the AO mechanically imposed the penalty without concrete charges and failed to consider the assessee's submissions or the rectification order. Emphasizing that penalty proceedings are quasi-criminal, the Tribunal held that the orders of the lower authorities were liable to be set aside. The issue was remitted back to the AO for fresh consideration to frame a concrete charge for levying the penalty, considering all objections.
Key Issues
Whether the penalty levied under Section 271(1)(c) for furnishing inaccurate particulars was justified, given the assessee's voluntary admission of income for clarity and a rectification order showing Nil tax demand.
Sections Cited
271(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH : COCHIN
Before: SHRI INTURI RAMA RAO & SHRI SOUNDARARAJAN K.
ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER
This is an appeal filed by the assessee challenging the order of the NFAC, Delhi dated 29/04/2024 in respect of the A.Y. 2016-17 and raised the following grounds:
2. The brief facts of the case are that the assessee is a society and filed their return of income on 28/06/2016 declaring Nil income. Thereafter, the scrutiny assessment proceeding was made in which the income was assessed at Rs. 59,95,702/-. Further, the additions and disallowances were made in respect of the claim of corpus donation from abroad and the receipt from the sundry debtors and the income from the sale of vehicle. Thereafter, the assessee filed an appeal against the additions and disallowances. After the order of the Ld.CIT(A), the AO levied penalty u/s. 271(1)(c) of the Act for furnishing the inaccurate particulars. As against the said order, the assessee filed an appeal before the Ld.CIT(A) and contended that there was no actual incomes reported inaccurately but because of some clarity, the said incomes of corpus donations was added to the income and therefore the said income is not a concealment for furnishing of inaccurate particulars. The assessee also contended that the Ld.CIT(A) had not confirmed the additions as seen from the rectification order and therefore in the rectification order, Nil demand was raised by the AO and therefore the penalty levied u/s. 271(1)(c) is not correct. The Ld.CIT(A) had not accepted the submissions made by the assessee and dismissed the appeal. As against the said dismissal order, the assessee is in appeal before this Tribunal.
3. At the time of hearing, the Ld.AR submitted that the order imposing the penalty u/s. 271(1)(c) is not a well considered order and the AO had not made out any case for imposing penalty u/s. 271(1)(c) of the Act. The Ld.AR further submitted that the ingredients to attract penalty u/s. 271(1)(c) was not there in the order and therefore the levy being the penalty, is liable to be set aside.
The Ld.DR relied on the order of the lower authorities and submitted that the penalty has been rightly imposed for furnishing inaccurate particulars.
We have heard the arguments of both sides and perused the materials available on record.
We have perused the order imposing penalty u/s. 271(1)(c) of the Act in which the AO had mechanically imposed the penalty on the ground that there are some inaccurate particulars furnished by the assessee. The AO had not considered the various submissions made before him and no concrete charge was made by the AO for imposing the penalty in the facts and circumstances of the case. As seen from the penalty order, the assessee submitted that there is no inaccurate particulars furnished by the assessee, everything was made available to the assessing officer and because of some clarity in respect of the corpus donations, the assessee had offered to treat the same as income and even the rectification order passed by the AO shows that there is Nil demand of tax and in such circumstances, the AO ought to have considered the issue in detail and gave a definite conclusion in order to impose penalty u/s. 271(1)(c) of the Act. The Ld.CIT(A) also not appreciated the said facts but confirmed the levy of penalty.
In such circumstances, we are of the considered opinion that the orders of the authorities below are liable to be set aside and we remit the issue to the file of the AO in order to give a concrete charge for levying the penalty after considering the objections filed by the assessee since the levy is a quasi criminal proceedings. We also make it clear that the penalty is not an automatic one and it depends upon the various factors which would be considered by the assessing officer at the time of passing the order.
In view of the disposal of the main appeal, the stay application becomes infructuous and the same is dismissed.
In the result, the appeal filed by the assessee is allowed for statistical purposes and the stay application is dismissed as infructuous.
Order pronounced in the open court on 27th February, 2025.