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Facts
The assessee, a cooperative society manufacturing sugar, challenged a penalty levied under Section 271(1)(c) for concealment of income. The penalty was imposed due to a disallowance of unpaid leave encashment under Section 43B, which had attained finality in the assessment proceedings.
Held
The tribunal held that the disallowance under Section 43B for unpaid leave encashment does not automatically lead to a penalty under Section 271(1)(c). Citing the Supreme Court's decision in CIT vs. Reliance Petroproducts (P) Ltd., the tribunal found no complex misrepresentation of facts by the assessee and deleted the penalty.
Key Issues
The key legal issue was whether a disallowance of unpaid leave encashment under Section 43B automatically attracts a penalty for concealment of income under Section 271(1)(c).
Sections Cited
Section 271(1)(c), Section 143(3), Section 43B
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Income Tax Appellate Tribunal, DEHRADUN BENCH, DEHRADUN
Before: Sh. Satbeer Singh Godara & Sh. Manish Agarwal
ORDER
Per Satbeer Singh Godara, Judicial Member:
This assessee’s appeal for Assessment Year 2014-15, arises against the CIT(A), Haldwani’s order dated 16.02.2018 in case No. 10172/CIT(A)/HLD/2016-17, in proceedings u/s 143(3) of the Income Tax Act, 1961.
Heard both the parties at length. Case file perused.
We notice during the course of hearing that the assessee/appellant raises it’s sole substantive grievance challenging both the learned lower authorities’ action levying section 271(1)(c) penalty of Rs.54,56,853/- in the Assessing
Both the learned representative vehemently reiterates their respective stands against and in support of the impugned penalty. The assessee is admittedly a cooperative society engaged in the business of manufacture/production of sugar in the relevant previous year. And that the learned Assessing Officer had framed his section 143(3) assessment on 01.12.2016 invoking section 43B “unpaid leave encashment amount” outstanding in the balance sheet to the tune of Rs.47,67,222/- which has attained finality. Both the learned lower authorities hold in this factual backdrop that the above disallowance is an instance of concealment of income at the assessee’s behest attracting section 271(1)(c) in issue.
We have given our thoughtful consideration to the assessee’s and the Revenue’s respective vehement submissions. We find no reason to sustain the impugned penalty. This is for the precise reason that hon’ble apex court landmark decision in CIT vs. Reliance Petroproducts (P) Ltd. (2010) 322 ITR 158 (SC) has already settled the issue long back that quantum and penalty stand on different footing wherein each and every disallowance addition made in the course of the former does not ipso facto the latter penal provision. We reiterate that all the impugned disallowance has been made is that unpaid leave encashment u/s 43B than that requiring a complex misrepresentation of the fact that the assessee’s behest. We thus deleted the impugned penalty of Rs.54,56,853/- levied by both the learned lower authorities in very terms.