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Facts
The Revenue appealed the CIT(A)'s order deleting a penalty of Rs. 2,25,00,000 imposed under section 271(1)(c) of the Income-tax Act, 1961. The penalty was levied for alleged concealment and furnishing inaccurate particulars of income by the assessee.
Held
The Tribunal held that the addition made by the Assessing Officer was based on proportionate administrative expenditure and mere assumptions rather than actual material against the assessee. The Tribunal also noted that if the reopening of assessment under section 147 is not sustainable, then the penalty cannot be imposed.
Key Issues
Whether penalty under section 271(1)(c) is sustainable when the underlying addition is based on assumptions and reopening is not sustainable in law?
Sections Cited
271(1)(c), 147
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Income Tax Appellate Tribunal, AGRA BENCH, AGRA
Before: SHRI SATBEER SINGH GODARA & SHRI MANOJ KUMAR AGGARWAL
ORDER
Per Satbeer Singh Godara, Judicial Member:
This Revenue’s appeal for assessment year 2011-12, arises against the Commissioner of Income Tax (Appeals)-4 [in short, the “CIT(A)”], Kanpur’s order dated 03.08.2021, involving proceedings under section 271(1)(c) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).
Heard both the parties. Case file perused.
Learned CIT(DR) vehemently argues during the course of hearing that the CIT(Appeals) herein has erred in law and on facts in deleting impugned section 271(1)(c) penalty of Rs.2,25,00,000/- imposed by the Assessing Officer vide order dated 20.06.2019, holding the assessee to have concealed and furnished inaccurate particulars of income. He further quotes (2024) 169 taxmann.com 16 (Delhi) Pawan Kumar Jaggi vs. ACIT to buttress the point that even in case of adhoc disallowances, penalty under section 271(1)(c) could very well be imposed. And case law (1992) 60 Taxman 51 (Allahabad) CIT v/s Radhey Shyam Shyam Sunder Jaiswal is also referred to state that even estimated additions also attract impugned penalty proceedings.
We have given our thoughtful consideration to both parties’ rival stands. The assessee’s case throughout has been that its case does not fall u/s. 271(1)(c) of the Act. Learned counsel first of all takes us to para 7.2 of the assessment order dated 30.12.2018 in which the addition made by the Assessing Officer was only of proportionate administrative expenditure than the issue forming subject matter of section 147 reopening for back to back contracts as noted by the CIT(Appeals) in para 6.2 of the lower appellate discussion. He next quotes CIT vs. Jet Airways (I) Ltd. 331 ITR 236 (Bom) and Ranbaxy Laboratories Limited vs. CIT, 336 ITR 136 (Del) to contend that once reopening in this case is not sustainable in law, no penalty could also be imposed. We find no reason to restore the penalty once it has come on record that 2 | P a g e expenditure disallowance is based on mere assumptions and presumptions than on any actual material against the assessee. This Revenue’s appeal seeking to revive the impugned section 271(1)(c) penalty fails accordingly.
This Revenue’s appeal is dismissed.. Order pronounced in the open court on11THFebruary, 2025.