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Facts
The assessee appealed against the penalty orders for Assessment Years 2013-14 and 2014-15, which arose from assessment orders passed under section 271(1)(c) of the Income Tax Act, 1961. The Assessing Officer imposed penalty, and the CIT(A) confirmed it, citing default revenue expenses.
Held
The Tribunal found merit in the assessee's argument that the issue of default revenue expenditure was debatable and did not warrant penalty. The twin ingredients of wilful concealment or submission of inaccurate particulars were not present.
Key Issues
Whether the levy of penalty under section 271(1)(c) for default revenue expenditure is justified when the issue is debatable and lacks wilful concealment or inaccurate particulars.
Sections Cited
271(1)(c)
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Income Tax Appellate Tribunal, DELHI BENCH, ‘E’: NEW DELHI
Before: SHRI SATBEER SINGH GODARA
ORDER PER AMITABH SHUKLA, AM,
The captioned appeals have been preferred by the assessee against order both dated 28.07.2025 of the Learned Commissioner of Income Tax (Appeals)- 31, New Delhi, [hereinafter referred to as ‘ld. CIT(A)] arising out of assessment orders both dated 22.03.2019 passed u/s 271(1)(c) of the Income Tax Act, 1961 pertaining to Assessment Years 2013-14 and 2014-15 respectively. The word ‘Act’ herein this order would mean Income Tax Act, 1961.
As the both the appeals involves the issue of levy of penalty, they were heard together and are being adjudicated by this common order. Considering the commonality of the issue, decision taken in AY 2013-14 shall apply mutatis mutandis to AY 2014-15. For the purposes of this order, AY 2013-14 is being taken as lead year.
The ld. Assessing Officer passed order dated 22.03.2019 under section 271(1)(c) for AY 2013-14. The ld. AO, inter alia, considering judicial precedents on the issue of penalty, imposed the penalty upon the premises that ld. CIT(A) has confirmed the addition on account of default revenue expenses. The ld. CIT(A) confirmed the penalty order concurring with the findings of the ld. AO.
Per contra, the ld. DR placed reliance upon the order of the lower authorities.
We have heard the rival submissions in the light of the material placed on record. It is the case of the assessee that there has neither been a case of wilful concealment or submission of inaccurate particulars of income on the part of the assessee. The ld. Counsel argued that the issue of default revenue expenditure is a debatable issue and that the same therefore would not attract invocation of penalty under section 271(1)(c) of the Act. Upon consideration of the matter, we find merit in the arguments of the appellant assessee. We are of the considered view that either of the twin ingredients of wilful concealment or Page 2 of 4 submission of inaccurate particulars of income on the part of the assessee are not available in the present case so as to attract imposition of penalty under section 271(1)(c) of the Act. Accordingly, the orders of lower authorities is set- aside and the penalty under section 271(1)(c) of the Act imposed vide order dated 22.03.2019 is directed to be deleted. All the grounds of appeal raised by the appellant assessee are therefore allowed.
In the result, the appeal of the assessee for AY 2013-14 is allowed.
We have noted that the facts for the AY 2013-14 in assessee’s appeal vide decision taken for AY 2013-14 would apply mutatis mutandis to AY 2014-15. Accordingly, all the grounds of appeal for AY 2014-15 in are also allowed.
Finally, both the appeals of the assessee are allowed.
Order pronounced in the open court on 14th January, 2026.