Compilations cases of various courts in favour of assessee for Penalties u/s 271(1)(1)(c) during the calendar year 2020.

Compilations cases of various courts in favour of assessee for  Penalties u/s 271(1)(1)(c) during the calendar year 2020.

===> (SC) S. 68 :- Cash credits-Bogus purchases-Unregistered dealers-Penalty proceedings producing affidavits and statements of unregistered dealers and establishing their credentials-Penalty set aside-Addition is held to be not justified. [S. 143(3) 144, 271(1) (c)]

The AO treated the purchases as “Cash credits” under S.68 of the Act.

Aggrieved, the appellant/assessee preferred an appeal before the CIT(A) who allowed the appeal of the assessee partially. Tribunal Confirmed the order of the AO.On appeal to High Court, The High Court dismissed the appeal vide impugned judgment and order dated 21.8.2008, as being devoid of merits. The High Court opined that the amount shown as credits was nothing but bogus entries and was justly added to the income of the appellant/assessee. The Court also noted other reasons to dismiss the appeal. On appeal the Supreme Court held that though the assessee failed to prove the genuineness of the purchases during the assessment proceedings, he filed affidavits and statements of the dealers in penalty proceedings. That evidence fully supports the claim of the assessee. The CIT(A) accepted the explanation of the assessee and recorded a clear finding of fact that there was no concealment of income or furnishing of any inaccurate particulars of income by the assessee.. Consequently, the quantum addition will also have to be deleted.The addition of Rs.2,26,000/ by the Officer under S. 68 of the 1961 Act, towards cash credit amount shown against the names of concerned unregistered dealers for the assessment year 1998-1999, is hereby set aside. The rest of the assessment order dated 30.11.2000 as modified by the CIT(A) vide order dated 9.1.2003, shall remain undisturbed. (AY.1998-99)

Basir Ahmed Sisodiya v. ITO (2020) 424 ITR 1 / 188 DTR 20 / 314 CTR 1 / 116 taxmann.com 375 / 271 Taxman 247 (SC)

===>(SC) S. 158BFA :- Block assessment-Penalty-Addition to undisclosed income on estimate basis-Deletion of penalty is held to be justified. [S.158BC, 158BFA(2), 158BGA(2), 271(1)(c)]

Dismissing the appeal of the revenue the Court held that the Tribunal is justified in deleting the penalty as the addition to undisclosed income was made on estimate basis. Referred IT v. Satyendrakumar Dosi (2009) 315 ITR 172 (Raj) (HC), CIT v. Dodsal Limited (2009) 312 ITR 112 (Bom.)(HC).(BP 1996-1997 to 2001-2002)

CIT v. Bagga Distilleries Hyderabad (P.) Ltd. (2020) 113 taxmann.com 602 (AP&T) (HC) Editorial: SLP of revenue is dismissed, CIT v. Bagga Distilleries Hyderabad (P.) Ltd. (2020) 270 Taxman 93 (SC)

===>(SC) S. 271(1)(c) :- Penalty-Concealment-Sale of land-Levy of penalty was held to be not justified.

Dismissing the appeal of the revenue the Court held that on identical facts penalty in the case of sister concern was deleted,following the same the penalty is deleted. (AY.2008-09)

PCIT v. Synbiotics Ltd. (2019) 112 taxmann.com 399 (Guj.)(HC)

Editorial: SLP of revenue is dismissed, PCIT v. Synbiotics Ltd (2020) 269 Taxman 50(SC)

===>(SC) S. 271(1)(c) :- Penalty-Concealment-Sale of land-Levy of penalty was held to be not justified.

Dismissing the appeal of the revenue the Court held that on identical facts penalty in the case of sister concern was deleted,following the same the penalty is deleted. (AY. 2008-09)

PCIT v. Synbiotics Ltd. (2019) 112 taxmann.com 399 (Guj.)(HC)

Editorial: SLP of revenue is dismissed, PCIT v. Synbiotics Ltd (2020) 269 Taxman 50(SC)

===>(SC) S. 271(1)(c) :- Penalty-Concealment-Unless while issuing notice under section 271, read with section 274, no details of any charge were provided penalty cannot be levied. [S. 274]

Dismissing the appeal of the revenue the Court held that unless while issuing notice under section 271, read with section 274, no details of any charge were provided penalty cannot be levied. Relied onAmrit Foods v. Commissioner of Central Excise, U.P. [2005] 13 SCC 419.

PCIT v. Basanti Properties (P.) Ltd. (2020) 114 taxmann.com 540 (Cal.)(HC)

Editorial: SLP of revenue is dismissed due to low tax effect, PCIT v. Basanti Properties (P.) Ltd. (2020) 269 Taxman 573 (SC)

===>(SC) S. 271(1)(c) :- Penalty-Concealment-Depreciation withdrawn during subsequent search proceedings-Levy of penalty is held to be not justified. [S. 32, 132(4), 153A]

Dismissing the appeal of the revenue the Court held that merely because the depreciation claimed on intellectual property was withdrawn in the course of search proceedings, levy of penalty was held to be not justified. Followed CIT v. Reliance Petro Products (P.) Ltd. (2010)322 ITR 158 (SC) (AY.

2004-05)

PCIT v. Financial Technologies Ltd (2019) 112 taxmann.com 398 (Bom.)(HC)

Editorial: SLP of revenue is dismissed, PCIT v. Financial Technologies Ltd (2020) 269 Taxman 32 (SC)

===>(SC) S. 271(1)(c) :- Penalty-Concealment-Capital gain not shown in original return-Revised return prior to issue of notice u/s. 153C of the Act-Deletion of penalty is held to be justified. [S. 45, 133A, 153C]

Dismissing the appeal of the revenue the Court heldthat, the assessee has shown the capital gains in revised return prior to issue of notice u/s 153C of the Act and the Assessing Officer has no-where recorded his satisfaction to the fact that the assessee has concealed the particulars of income or furnished any inaccurate particulars of such income. Accordingly the order of Tribunal is affirmed. Followed CIT v. Suraj Bhan (2007) 294 ITR 481 (P&H) (HC) Pr. CIT v. Neeraj Jindal (2017)393 ITR 1 (Delhi) (HC) (AY. 2010-11)

PCIT v. Prabhjot Kaur Chhabra (Smt.) (2020) 113 taxmann.com 140 (MP)(HC)

Editorial: SLP of revenue is dismissed, PCIT v. Prabhjot Kaur Chhabra (Smt.) (2020) 269 Taxman 34 (SC)

===>(SC) S. 271(1)(c) :- Penalty-Concealment-Not declared capital gain arising from sale of leasehold rights-Deletion of penalty is held to be justified. [S. 45, 54EC]

Dismissing the appeal of the revenue the Court held that, during assessment proceedings assessee had made full representation why according to his belief, receipt was not chargeable to tax and, in such a case, merely because Assessing Officer did not accept such a stand of assessee, would not automatically permit revenue to levy penalty. Relied, CIT v. Reliance Petroproducts Pvt. Ltd (2010) 322 ITR 158 (SC). Distinguished, UOI v. Dharmendra Textiles Processors (2008) 306 ITR 277 (SC) Mak Data P. Ltd. v. CIT (2013) 322 ITR 158 (SC) (AY. 2010-11)

PCIT v. Ashok Kumar Maneklal Parikh (2020) 120 taxmann.com 268 (Bom.)(HC)

Editorial: SLP of revenue is dismissed, PCIT v. Ashok Kumar Maneklal Parikh (2020) 274 Taxman 457 (SC)

===>(SC) S. 271(1)(c) :- Penalty-Concealment-Capital gains on sale of land-Revised return prior to issue of notice u/s 153C-Deletion of penalty is held to be justified. [S. 45, 139(3),153C]

AO imposed penalty by taking a view that she had not shown capital gain arising from sale of land in original return and said gain was declared only in return filed pursuant to notice issued under S.153C of the Act. Tribunal held that the assessee had filed a revised return prior to issue of notice under S.153C wherein capital gain in question was duly reflected. High Court affirmed the order of the Tribunal. (AY. 2010-11)

PCIT v. Prabhjot Kaur Chhabra. (2020) 113 taxmann.com 140 / 269 Taxman 35 (MP)(HC) Editorial: SLP of revenue is dismissed; PCIT v. Prabhjot Kaur Chhabra. (2020) 269 Taxman 34 (SC)

===>(SC) S. 275 Penalty-Bar of limitation-limitation begins to run from date of order of Appellate Tribunal was served upon Commissioner  :- Judicial). [S. 271(1)(c), 275(1)(a)]

Dismissing the appeal of the revenue the Court held that Tribunal was justified in holding that for purposes of penalty order under section 271(1)(c) read with section 275(1)(a) limitation begins to run from date of order of appellate tribunal was served upon Commissioner (Judicial). FollowedCIT v. Odeon Builders (P.) Ltd. (2017) 393 ITR 27 / 247 Taxman 184 (FB) (Delhi) (HC) where in the Court categorically held that in the context of Section 260A of the Act, the limitation period for filing an appeal against an order of the TAT would begin to run immediately upon a copy of the order being received by the CIT (Judicial).(AY. 2009-10)

PCIT v. Indian Sugar Exim Corpn. Ltd. (2020) 115 taxmann.com 266 (Delhi)(HC)

Editorial: SLP of revenue is dismissed, PCIT v. Indian Sugar Exim Corpn. Ltd. (2020) 272 Taxman 185(SC)

===>(All.)(HC) S. 271(1)(c) :- Penalty-Concealment-Finding in assessment proceedings-Burden of proof-Gift held to be nongenuine-In penalty proceedings revenue authorities have to arrive at independent finding related to concealment of income or inaccurate particular. [S. 68]

Assessee disclosed fact of gift in his return of income of income. The Assessing Officer assessed the gift as income from other sources. Addition was affirmed by the CIT(A) and also Tribunal.The Assessing Officer levied the penalty on the ground the assessee had furnished inaccurate particulars and had concealed particulars of its income.According to Assessing Officer, assessment order clearly demonstrated gift to be a sham transaction designed to avoid payment of tax and such findings were relevant evidence in penalty proceedings. Tribunal deleted the levy of penalty. On appeal by the revenue the Court held that since Assessing Officer did not record any findings as to incorrect, erroneous or false return of income filed by assessee and only doubted genuineness of gifts on ground of human probabilities, penalty imposed under section 271(1)(c) was not justified. Followed Anantharam Veerasinghaiah & Co (1980) 123 ITR 4 (SC) CIT v. Khoday Eswarsa & Sons (1972) 83 ITR 369 (SC) and Dilip N. Shroff v. CIT (2007) 291 ITR 519 (SC). (AY. 2000-01)

PCIT v. Dinesh Chandra Jain (2020) 271 Taxman 262 (All.)(HC)

===>(Bom.) (HC) S. 260A :- Appeal-High Court-Question of law-can be entertained by the High Court on the issue of jurisdiction even if the same was not raised before the Tribunal-The question relating to non striking off of the inapplicable portion in the s. 271(1)(c) show-cause notice goes to the root of the lis & is a jurisdictional issue. [S.271(1)(c), 274]

High court held that question of law which was not raised before the Tribunal can be raised before the High Court. Non striking of relevant portion of the penalty notice whether penalty cab be levied or not being question of law, the high Court entertained the question of law raised by the assessee. (Referred CIT v Jhabua Power ltd (2013) 37 taxmann.com 162 / 217 Taxman 399 (SC), Ashis Estates & Properties (P) Ltd v CIT (2018) 96 taxmann.com 305 /257 Taxman 585(Bom.)(HC)(ITA NO 958 of 2017b dt 12-06 2020 (AY.2003-04)

Ventura Textiles Ltd. v. CIT (2020) 426 ITR 478 / 315 CTR 729 /190 DTR 165/ 274 Taxman 144 (Bom.) (HC)

===>(Bom.)(HC) S. 271(1)(c) :- Penalty-Concealment-Capital gains-Year of taxability-Offered on the basis of consideration received-In response to notice u/s 148 the entire consideration was offered and accepted-levy of penalty is held to be not justified for furnishing in accurate particulars of income. [S. 45, 147, 148]

Assessee sold a plot of land and received consideration in several instalments in different assessment years. During relevant assessment year, assessee offered to tax amount of consideration which was received during previous year. An assessment order was passed. Later on, Assessing Officer issued a reopening notice against assessee raising objection with manner in which capital gains from sale agreement with respect to said plot was offered to tax by assessee on receipt basis. In response to same, assessee filed return withdrawing amount of capital gains and offering to tax capital gains on entire sale consideration. Assessing Officer completed reassessment and taxed capital gains arising on entire sale consideration for relevant assessment year. He also levied penalty under section 271(1)(c) on assessee for furnishing inaccurate particulars of income as a result of default committed by assessee in not offering capital gains arising out of entire sale consideration in relevant assessment year. The levy of penalty was affirmed by the CIT(A) and Appellate Tribunal. On appeal the appellant contended that there was a complete disclosure by assessee and, therefore, it was not a case of assessee furnishing inaccurate particulars of income or of concealing particulars of income. It was noted that it was quite evident that assessee had declared full facts and sale agreement at first instance. Full factual matrix or facts were before Assessing Officer while passing assessment order. The assessee had never suppressed any material fact from revenue it was another matter that claim based on such facts was found to be inadmissible. This was not same thing as furnishing inaccurate particulars of income as contemplated under section 271(1)(c). High Court deleted the penalty. (AY.2005-06)

Omprakash T. Mehta v. ITO (2020) 274 Taxman 110 / 193 DTR 25 / 316 CTR 280 (Bom.)(HC)

===>(Bom.)(HC) S. 271(1)(c) :- Penalty-Concealment-Not recording of satisfaction-Order of Tribunal quashing the reassessment proceeding was affirmed.

Dismissing the appeal of the revenue the Court held that there was no recording of satisfaction by Assessing Officer in relation to any concealment of income or furnishing of inaccurate particulars by assessee in notice issued for initiation of penalty proceedings under section 271(1)(c), same being sina qua non for initiation of such proceedings, Tribunal had rightly ordered to drop penalty proceedings. Distinguished. Mak Data (P.) Ltd. v. CIT (2013) 358 ITR 593 (SC)

PCIT v. Goa Coastal Resorts and Recreation (P) Ltd. (2020) 272 Taxman 157 (Bom.)(HC)

===>(Bom.)(HC) S. 271(1)(c) :- Penalty-Concealment-Business expenditure-Full particulars were declared in the return-Merely because disallowance of expense, levy of penalty is held to be not justified on merit-Not sticking of inapplicable portion in the notice-In assessment order it was clearly mentioned that penalty proceedings u/s 271(1)(c) had been initiated separately for furnishing inaccurate particulars of income.-Penalty cannot be quashed only on technical ground not sticking of inapplicable portion in the notice. [S. 37(1), 274]

Court held that it would be too technical and pedantic to take the view that because in the printed notice the inapplicable portion was not struck off, the order of penalty should be set aside even though in the assessment order it was clearly mentioned that penalty proceedings u/s 271(1)(c) had been initiated separately for furnishing inaccurate particulars of income, (iv) Penalty cannot be imposed for alleged breach of one limb of s. 271(1)(c) of the Act while proceedings were initiated for breach of the other limb of s. 271(1)(c). This vitiates the order of penalty, (v) Threat of penalty cannot become a gag and / or haunt an assessee for making a claim which may be erroneous or wrong Concealment of particulars of income was not the charge against the appellant, the charge being furnishing inaccurate particulars of income. it is trite that penalty cannot be imposed for alleged breach of one limb of Section 271(1)(c) of the Act while penalty proceedings were initiated for breach of the other limb of Section 271(1)(c). This has certainly vitiated the order of penalty. Followed CIT v.Reliance Petroproducts Ltd (.2010) 322 ITR 158 (SC)(Referred v CIT Vs. SSA’s Emerald Meadows, (2016) 73 Taxmann.com 248(SC)/ 242 Taxman 180 (SC) ; CIT Vs. SSA’s Emerald Meadows, (2016) 73 Taxmann.com 241(Karn.)(HC) CIT v. Manjunath Cotton and Ginning Factory 359 ITR 565 (Kran) (HC), CIT v. Samson Pernchery, (2017) 98 CCH 39 (Bombay);PCIT Vs. New Era Sova Mine, (2019) SCC OnLine Bom.1032; PCIT Vs. Goa Coastal Resorts & Recreation Pvt.Ltd., (2019) 106CCH 0183 (2020) 113 taxmann.com 574 (Bom.) (HC) ;PCIT v. Shri Hafeez S. Contractor, ITA Nos.796 and 872 of 2016 dt. 11.12.2018.(AY.2003-04)

Ventura Textiles Ltd. v. CIT (2020) 426 ITR 478 / 315 CTR 729 / 190 DTR 165 / 274 Taxman 144 (Bom.)(HC)

===>(Bom.)(HC) S. 271(1)(c) :- Penalty-Concealment-Capital gains-Merely because claim is not accepted levy of penalty is held to be not justified. [S. 45, 54EC]

Dismissing the appeal of the revenue that, merely because claim is not accepted levy of penalty is held to be not justified. Distinguished,Mak Data P. Ltd v.CIT (2013) 358 ITR 593 (SC) UOI v.Dharmendra Textiles Processors and others (2008) 306 ITR 277 (SC).(AY. 2010-11)

CIT v. Bharatkumar Maneklal Parikh (2020) 185 DTR 77 (Bom.)(HC)

===>(Guj.)(HC) S. 271(1)(c) :- Penalty-Concealment-Survey-Before due date of filing of return-Amount disclosed in the return-Return accepted without additions-Levy of penalty is held to be not valid. [S. 132, 133A, 139(1)]

Dismissing the appeal of the revenue the Court held that the Tribunal proceeded on the principle of law that when the assessee had disclosed the amount during the survey action under S. 133A and the amount was disclosed in the return of income filed under section 139(1), there could not be any order of penalty under section 271(1)(c). (AY.2012-13)

PCIT v. Yamunaji Corporation (2020) 424 ITR 369 (Guj.)(HC)

===>(Guj.)(HC) S. 271(1)(c) :- Penalty-Concealment-Capital or revenue-Claim for deduction disallowed-Penalty cannot be levied.

Dismissing the appeal of the revenue the Court held that the disallowance of expenditure on account of the professional fees, travelling expenses, tender expenses, etc., with respect to the new power projects were wrongfully claimed as revenue expenditure by the assessee which was confimed in quantum proceedings would not justify levy of penalty on the ground that inaccurate particulars of income had been furnished. CIT v. Reliance petroproducts pvt. ltd.(2010) 322 ITR 158 (SC), (AY.2007-08)

PCIT v. CLP Power India Pvt. Ltd. (2020) 424 ITR 98 (Guj.)(HC)

===>(Karn.)(HC) S. 271(1)(c) :- Penalty-Concealment-Notice not specifying the charge-Mere disbelieving of explanation is not sufficient-levy of penalty is held to be not valid. [S. 274]

Allowing the appeal the Court held that the notice under section 274 read with section 271(1)(c) was issued for the assessment year 2002-03 and not for the assessment year in question that is 1999-2000. Besides this, there was no mention in the notice that the assessee had concealed the income or furnished inaccurate particulars of income. The authorities had failed to appreciate that penalty proceedings and the assessment proceedings are distinct and since, the assessee had not commenced the business, it could not have earned income, which had not been accounted for. The Tribunal had failed to take into account the well settled legal principles that mere disbelief of an explanation would not be sufficient to impose penalty. The order of penalty was not valid.(AY.1999-2000)

Kaveri Associates v. ACIT (2020) 429 ITR 40 / 275 Taxman 545 (Karn.)(HC)

===>(Mad.)(HC) S. 254(1) :- Appellate Tribunal-Duties-Additional income offered-Confirming the levy of concealment penalty without giving an opportunity is held to be bad in law-Matter reamnded to the Appellate Tribunal. [S.271(1)(c)]

Allowing the appeal the Court held thatTribunal has not only committed some factual errors in respect of filing of return of income by the Assessee but also invoked Explanation 3 and 5A of Section 271(1)(c) of the Act with respect to the alleged non-filing return of income by the Assessee in pursuance of notice issued after the Search which took place in the business place of the Assessee and such a revised Return was filed by the Assessee voluntarily surrendering such income of Rs.1,53,99,000/-and while apparently surrendering all the income on its own by the Assessee ought not to have attracted penalty for concealment under Section 271(1)(c) of the Act, the learned Tribunal has not only restored the penalty by the impugned order but also restored the penalty on the issue for which no ground was raised in the Grounds of Appeal filed by the Revenue before it. The Explanations which give rise to presumption of concealment are rebuttable presumptions and therefore without discussing those facts about such rebuttal or otherwise, the Penalty could not be reimposed by the Tribunal particularly when it was reversing the order of the learned Commissioner of Income Tax (Appeals) in this regard, who found the explanation of the Assessee satisfactory and had deleted the penalty in question. The order was quashed and remanded to the Tribunal to decide in accordance with law. (AY.2006-2007)

S & P Foundation P. Ltd. v. ACIT (2020) 195 DTR 10 (Mad.)(HC)

 

===>(Mad.)(HC) S. 271(1)(c) :- Penalty-Concealment-Export oriented undertakings-Bonafide claim-Deletion of penalty is held to be justified. [S. 10B]

For relevant years assessee filed its returns claiming exemption of income under section 10B. Subsequently, assessee realizing that it was not eligible for said exemption in assessment years in question, withdrew its claim itself before assessing authority. Assessing Officer levied the penalty. Tribunal held that the assessee had furnished full particulars of income in support of its claim raised under section 10B in its returns. It was also found that said claim was raised bona fidely as there was confusion over admissibility of same on account of statement of Union Finance Minister, extending Sunset clause for exemption in question for 100 percent EOUs up to year 2015. Tribunal set aside penalty order. On appeal High Court affirmed the order of the Tribunal (AY. 2010-11, 2011-12)

PCIT v. Core Carbons (P) Ltd. (2020) 273 Taxman 420 (Mad.)(HC)

===>(Mad.)(HC) S. 271(1)(c) :- Penalty-Concealment-Failure to file form No 29B-Retrun filed on the advice of Chartered Accountant-Levy of penalty is held to be not justified. [S. 115JB]

Allowing the appeal of the assessee the court held that the assessee's specific case was that they were advised to file the return of income in a particular fashion and prior to the assessment proceedings, their Chartered Accountant had passed away and this had led to the mistake, which the Assessing Officer pointed out during the assessment proceedings. Thus, in our considered view, the assessee's case is not a case where the provisions of Section 271(1)(c) of the Act could have been invoked, as there has been no finding recorded by the Assessing Officer that they have furnished inaccurate particulars or for concealing particulars. Therefore, we find that the order passed by the Assessing Officer imposing penalty vide order dated 27.06.2012 is perverse. Consequently, the orders passed by the CIT(A) and the Tribunal confirming such orders are liable to be interfered with. (AY. 2009-10)

Vinay Autoparts P. Ltd. v. ITO (2020) 187 DTR 398 (Mad.)(HC)

===>(Mad.)(HC) S. 271(1)(c) :- Penalty-Concealment-Search and seizure-Block assessment-Penalty confirmed-Direction by CIT(A) regarding levy of penalty under S. 271AAA was rightly deleted by the Tribunal-Assessee has not challenged the levy of penalty u/s 271(1)(c) of the Act. [S. 153A, 251, 271AAA]

Dismissing the appeal, that the Tribunal stated that the appeal filed by the assessee was allowed and the appeal filed by the Department was dismissed. However, this was incorrect because the order had to be read as a whole particularly paragraphs 6 and 7 of the order. It was clear that the Tribunal came to the conclusion that the assessee was liable to penalty under section 271(1)(c). After holding that the assessee was liable to penalty under section 271(1)(c) of the Act, the Tribunal had proceeded to consider the question whether the Commissioner (Appeals) was justified in giving a direction to the Assessing Officer to levy penalty under section 271AAA of the Act. After considering the effect of the provision, the Tribunal held that the Commissioner (Appeals) did not have the power to give a direction to the Assessing Officer to levy penalty under section 271AAA of the Act on the undisclosed income and accordingly set aside that direction. Therefore, the appeal filed by the assessee stood allowed only to that extent and did not amount to deletion of the penalty levied by the Assessing Officer under section 271(1)(c) of the Act by order dated June 27, 2011. Hence, the Tribunal had rightly observed that when the Tribunal held that the penalty could not be levied under section 271AAA of the Act, it was automatic that the levy of penalty made under section 271(1)(c) of the Act was confirmed. The Tribunal further observed that the assessee had not challenged the levy of penalty under section 271(1)(c).(AY.2008-09)

R.        Mahalakshmi (Smt.) v. ACIT (2020) 427 ITR 126 / 193 DTR 313 / 273 Taxman 17 (Mad.)(HC)

===>(Mad.)(HC) S. 271(1)(c) :- Penalty-Concealment-Inadvertent error-Failure to disallow the unpaid interest-Levy of penalty is held to be not justified. [S. 43B(e)]

The assessee has not disallowed the unpaid interest under S. 43B of the Act. In response to penalty notice the assessee submitted that the it had returned a loss and had substantial carry forward losses also and consequently, the assessee had no benefit, interest or intention in making an unsupportable claim to enhance the loss. However the AO levied the penalty.On appeal the CIT(A) Deleted the penalty, which was affirmed by the Appellate Tribunal on the ground that the omission to make suo motu disallowance under section 43B(e) was an inadvertent error and not with an intention to understate the income. On appeal by revenue dismissing the appeal the Court held that the conduct of the assessee established that the omission to make suo motu disallowance under section 43B(e) was an inadvertent error and not with an intention to understate its income by furnishing inaccurate particulars and could not be stated to be a contumacious conduct on the part of the assessee with an intention to understate its income. (MAK DATA P. LTD. v. CIT(2013) 358 ITR 593 distinguished., followed Price Waterhouse Coopers Pvt. Ltd. v. CIT (2012) 348 ITR 306 (SC). (AY. 2012-13)

CIT v. Celebrity Fashions Ltd. (2019) 105 CCH 0499 / (2020) 421 ITR 458 (Mad.)(HC)

===>(Ahd.) (Trib.) S. 271(1)(c) :- Penalty-Concealment-Disallowance of interest-Mere wrong claim not tantamount to furnishing of inaccurate particulars of income or concealment of income.

Tribunal held that it was only a case of opinion on the part of the Assessing Officer that the assessee had diverted interest bearing funds to interest-free advances ignoring the fact that the assessee had huge interest-free reserves. The penalty was imposed by calculating notional interest on interest-free advances. The assessee had not concealed any particulars of income. Even if the assessee had made a wrong claim a mere wrong claim could not amount to furnishing of inaccurate particulars of income or concealment of income. The penalty was not sustainable. (AY.2011-12)

Deem Roll-Tech Ltd. v. Dy.CIT (2020) 78 ITR 45 (SN) (Ahd.) (Trib.)

===>(Ahd.)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Disallowance of interest on estimate basis-Penalty not leviable. [S. 36(1)(iii)]

Tribunal held that,disallowance of interest on estimate basis,there being no concealment of fact per se, imposition of penalty was not justified in the absence of any contumacious or dishonest conduct by the assessee. (AY.2012-13)

Electron Colour Chem Pvt. Ltd. v. ITO (2020) 83 ITR 73 (SN) (Ahd.)(Trib.)

===>(Ahd.)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Failure to disclose in respect of income with respect to two bank accounts-Mistake of consultant-Omission neither deliberate nor contumacious in conscious disregard to his obligation-Bona fide mistake-Levy of penalty is held to be not justified. [S. 44AD, 139, 143(2)]

Tribunal held that notice under section 143(2) was required to be given to an assessee by the Assessing Officer for scrutinising its return. This was an opportunity to an assessee to submit what the assessee wants to submit in support of the return he had submitted. On receipt of such notice, the assessee realised the mistake that his tax consultant had not included the income with respect two bank accounts. The assessee had submitted details of the bank accounts to the tax consultants and its income was to be computed under section 44AD. Somehow the details from two banks accounts were not considered by the tax consultant while filing the return. Therefore, the moment it came to know to the notice of the assessee, he immediately filed a revised statement and paid taxes. He did not dispute inclusion of the income embedded in those accounts. Similarly, he had included certain minor income in shape of dividend income and interest income. No doubt the assessee should have been more vigilant while filing return but he was running a proprietary concern and had given all the details to his tax consultant. Under some human error, the proceeds from retail sale of chemicals deposited in two accounts remained to be accounted for the purpose of computation of turnover for estimating the profits under section 44AD. Omission by the assessee was neither deliberate nor contumacious in conscious disregard to his obligation. The assessee had immediately filed a revised statement and paid taxes. It was a bona fide mistake not warranting penalty. (AY.2014-15)

Rashid K. Nurani v. ITO (2020) 78 ITR 26 (SN) (Ahd.)(Trib.)

===>(Ahd.)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Gratuity and exhibition expenses-Genuineness of expenses not doubted-Failure to deduct tax at source-Levy of penalty is held to be not justified.

The Tribunal held that the genuineness of exhibition expenses claimed was not found incorrect by the authority. Therefore the assessee should not be visited with penalty merely because the claim made by the assessee was not maintainable in the view of the Department unless and until the genuineness of the expenses claimed found to be incorrect or erroneous. The provisions of law permit the assessee to claim the deduction in the year in which the assessee deducts the tax at source and deposits the amount to the Department. Thus the assessee had not furnished any inaccurate particulars of income deliberately. Accordingly he could not be visited with the concealment penalty. Followed Price Waterhouse Coopers Pvt. Ltd. v. CIT(2012) 348 ITR 306 (SC) (AY.2012-13)

Arrow Digital P. Ltd. v Dy. CIT (2020) 80 ITR 360 (Ahd.)(Trib.)

===>(Ahd.)(Trib.) S. 271(1)(c) :- Penalty-Concealment--Furnishing inaccurate particulars of income-Sufficient interest-free funds available with Assessee-Interest expenses not disallowable-Mere wrong claim does not tantamount to furnishing of inaccurate particulars of income or concealment of income-Penalty not leviable in such cases.

On appeal, the Tribunal held that sufficient interest-free funds were available with the assessee against which it had advanced a meagre amount on which it had not charged interest. Hence, interest was not disallowable. Moreover, it was only a case of opinion on the part of the Assessing Officer that assessee had diverted interest bearing funds to interest-free advances ignoring the fact that the assessee had huge interest-free reserves. The penalty was imposed by calculating notional interest on interest-free advances. The assessee had not concealed any particulars of income. Mere wrong claim could not amount to furnishing of inaccurate particulars of income or concealment of income, hence, levy of penalty was not sustainable. (AY.2011-12)

Deem Roll-Tech Ltd. v. DCIT (2020) 78 ITR 45 (SN) (Ahd.)(Trib.)

===>(Ahd.)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Long term capital gains-Search-Addition on account of difference between the rate adopted by assessee and department-levy of penalty is held to be not justified. [S. 132, 139, 153A, 271(1)(c), Expl. 5A, 274].

Tribunal held that under Explanation 5A to S 271(1)(c) the penalty shall be levied if the assessee in the course of action initiated under S. 132 was found to be the owner of any money, bullion, jewellery or other valuable article or there is some income based on the entry in the books of account or documents. Then, it shall be presumed that the assessee has either concealed the particulars of income or furnished inaccurate particulars of income. However in the case of the assessee there was no such allegation made by the authorities. The assessee had already disclosed the long-term capital gains in the return filed under S. 139. The addition in the assessment framed under S. 153A was made on account of the difference between the rate adopted by the assessee vis-a-vis that adopted by the Department as on April 1, 1981. The assessee had taken the rate at Rs. 84.80 per square foot for the acquisition of the land whereas the Assessing Officer had adopted the rate at Rs. 15 per square foot for the acquisition of such land as on April 1, 1981. Thus the addition was not on the basis of any incriminating document found during the course of search. The additional income in the return file under S. 153A was declared voluntarily and without any income or documents having been found by the Department in the manner provided under Explanation 5A to S. 271(1)(c). No undisclosed income by the Department was found in the course of the search conducted under S. 132. There could not be any penalty under Explanation 5A to S. 271(1)(c) until and unless it supported on the basis of incriminating document. (AY.2011-12)

Lopa Pankaj Dave (Smt.) v. Dy.CIT (2020) 77 ITR 29 (SN) (Ahd.)(Trib.)

Manubhai Bhailal Patel (Late) v. Dy.CIT (2020) 77 ITR 29 (SN) (Ahd.)(Trib.)

Ramanbhai Bhailal Patel (Late) v. Dy. CIT (2020) 77 ITR 29 (SN) (Ahd.)(Trib.)

Prabhaben M. Patel (Smt.) v. Dy.CIT (2020) 77 ITR 29 (SN) (Ahd.)(Trib.)

===>(All) (HC) S. 271(1)(c) :- Penalty-Concealment-Gift-Burden of proof on revenue-Donors taxpayers declared transactions in their returns-Deletion of penalty by the Tribunal is held to be justified.

Dismissing the appeals of the revenue the Court held that t it was not a case of either concealment of income or of furnishing inaccurate particulars as neither the assessing authority nor the first appellate authority had recorded any finding to the effect that the details furnished by the assessee were incorrect, erroneous or false. The Assessing Officer did not record any finding as to an incorrect, erroneous or false return of income having been filed by the assessee which could lead to the fact that the assessee had furnished inaccurate particulars of income which would have made him liable for penalty under section 271(1)(c). The Assessing Officer had only doubted the genuineness of the gifts on the ground of human probabilities and had also doubted the creditworthiness of the donors and genuineness of the transactions. The Tribunal had recorded that the identity of creditors, their creditworthiness and genuineness of the transactions were before the Assessing Officer who had not properly appreciated them and had discarded and doubted the genuineness of the gifts on the ground of human probabilities, though the donors were taxpayers and the amounts gifted had been disclosed in their tax returns for the relevant year. The Tribunal had recorded a finding of fact and that no penalty could be imposed under section 271(1)(c) as the Department had failed to establish that the assessee had concealed income or furnished inaccurate particulars of income. The order of the Tribunal deleting the penalty was justified. (ITA Nos. 276 to 277 of 2015, ITA Nos 187 to 200 of 2015 dt 26-08-2019) (AY. 2000-01' to 2005-06)

CIT v. Dinesh Chandra Jain. (2020) 420 ITR 364 (All) (HC)

===>(Amritsar ) ( Trib) S. 271(1)(c) :- Penalty - Concealment - Failure to strike off the irrelevant default in show cause notice -Levy of penalty is held to be not valid [ S. 274 (1)

AO had failed to discharge his statutory obligation of fairly putting the assessee to notice as regards the default for which he was being proceeded against, therefore, the penalty under Sec. 271(1)(c) imposed by him in clear violation of the mandate of Sec. 274(1). Penalty order was quashed . ( AY. 2004-05)

Pardeep Kumar Sareen v. ITO (2020) 206 TTJ 12 (UO ) (Amritsar ) ( Trib)

===>(Amritsar) (Trib.) S. 271(1)(c) :- Penalty -Concealment - Notice- Irrelevant words were not strike down by AO -Non application of mind by AO - Notice was bad in law --Levy of penalty is held to be bad in law. [ S.274 ]

Where notice u/s 274 was issued by AO without striking the irrelevant words, the same shall be inferred as non-application of mind by the AO. The said notice failed to specify whether the assessee had concealed the particulars of income or had furnished inaccurate particulars of income, so as to provide adequate opportunity to the assessee to explain the show cause notice. Thus, the notice was considered bad in law and could not be considered a valid notice sufficient to impose the penalty u/s 271(1)(c).(AY. 2008 -09, 2009 -10, 2011-12 )

Darshan Pal Singh Garewal v. Dy. CIT (2020) 196 DTR 1 / 208 TTJ 259 (Amritsar) (Trib.) Malti Gupta v. Dy. CIT (2020) 196 DTR 1 / 208 TTJ 259 (Amritsar) (Trib.)

Tejender Singh Sahai v. Dy. CIT (2020) 196 DTR 1 / 208 TTJ 259 (Amritsar) (Trib.)

===>(Bang.)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Bona fide and inadvertent reporting of lower Book profits in return-Levy of penalty is not valid. [S. 115JB]

Tribunal held that a perusal of the details filled in the return would show that the assessee had filled in the business income details therein, instead of filling up the details of the profit and loss account. This mistake had a cascading effect and the software had picked up the erroneous figures for computing the book profits under section 115JB. The audited profit and loss account disclosed the net profit before tax at Rs. 1,52,18,851. The audit report obtained in form 29B under section 115JB of the Act also disclosed the net profit at Rs. 1,52,18,851 and the book profits were also arrived at, at the very same figure. The mistake had occurred due to erroneous feeding of data while filling up the return of income. This was a bona fide and inadvertent error. The imposition of penalty was not justified. (AY.2011-12)

Vanshee Builders and Developers P. Ltd. v. Dy.CIT (2020) 84 ITR 1 (SN) / (2021) 187 ITD 361 (Bang.)(Trib.)

===>(Bang.)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Disallowance of expenses due to not deduction of tax at source-Disallowance of expenses on Corporate social responsibility expenses-Levy of penalty is held to be not valid.[S. 37(1),40(a)(1), 40(a)(iii)]

Held, that the disallowances made under section 40(a)(i) and 40(a)(iii) are statutory disallowances which are required to be made for failure to deduct tax at source under the provisions of the Act. It was not the case of the Department that the expenses, which were disallowed due to statutory provisions, were either bogus or non-genuine, i. e., but for the statutory provisions, the expenses were allowable under the Act. The assessee had disclosed the details relating to the relevant expenses. Hence, the question of furnishing of inaccurate particulars of income with regard to these disallowances did not arise. Merely making a claim which is not sustainable in law by itself will not amount to furnishing of inaccurate particulars of income. The assessee had claimed expenditure which was otherwise allowable, but for the statutory provisions of section 40(a)(i) and (iii). Hence, such statutory disallowance would not fall under the category of furnishing of inaccurate particulars of income and therefore, penalty levied under section 271(1)(c) was not sustainable on such kind of disallowances. Followed CIT v. Reliance petroproducts P. Ltd (2010) 322 ITR 158 (SC) Tanushree basu v. ACIT (I. T. A. No. 2922/Mum/2012, dt 25-5 2013. As regards disallowance of expenses on Corporate social responsibility expenses, claim being bonafide levy of penalty is held to be not justified. (AY.2015-16)

Frontier Business Systems P. Ltd. v. ITO (2020) 79 ITR 34 (SN) (Bang.)(Trib.)

===>(Bang.)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Vague allegation-Not specifying specific charge-0levy of penalty is not valid. [S. 274]

Tribunal held that notice under S. 274 should specifically state the grounds mentioned in S. 271(1)(c), i. e., whether it is for concealment of income or for furnishing of inaccurate particulars of income and sending a printed form where all the grounds mentioned in S. 271 are mentioned would not satisfy requirement of law. The assessee should know the grounds which he has to meet specifically. Otherwise, the principles of natural justice are offended. On the basis of such proceedings, no penalty could be imposed to the assessee. Accordingly, that in each of the notices issued by the AO under S. 274, the AO alleged that the assessee had concealed the particulars of his income or had furnished inaccurate particulars of such income. The allegation was vague and no penalty could be levied. (AY. 2009-10 to 2014-15)

Harshvardhan v. Dy. CIT (2020) 77 ITR 81 (SN) / 195 DTR 145 / 206 TTJ 894 (Bang.)(Trib.)

===>(Chen.)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Capital gains-Transfer of book adjustment-income resulting to loss-inadvertent mistake-Levy of penalty is held to be not justified. [S. 45]

Allowing the assessee the Tribunal held that the explanation furnished by the assessee that by inadvertent mistake and human error, the capital gains derived from transfer of equity shares were not reported in the return of income filed for the relevant year was bona fide. It was possible when a transaction was settled by book adjustment that too on the direction of the High Court, to have an understanding that the particular transaction could not lead to tax. Moreover, even after computation of long-term capital gains from transfer of the equity shares the assessed income for the year resulted in a net loss. Thus, there was no deliberate attempt by the assessee to conceal particulars of income or evade payment of taxes. Liability could not be fastened under section 271(1)(c) of the Act. (AY. 2007-08)

Advent Computer Services Ltd. v. ACIT (2020) 84 ITR 29 (SN) (Chen.)(Trib.)

===>(Chennai)(Trib.) S. 271(1)(b) :- Penalty-Failure to comply with notices-Regular assessment details were filed-Not ex prate best judgment-Penalty is held to be not justified. [S. 142(1), 274]

Tribunal held that the assessee had subsequent to issue of both notices under section 142(1) entered appearance before the Assessing Officer during assessment proceedings and filed the requisite details. The Assessing Officer passed an assessment order and not an ex parte best judgment assessment order. Thus, it was not a case where the assessee did not enter appearance post-notices during assessment proceedings nor where it did not furnish the desired details. The assessee had entered appearance post-issue of these notices and furnish the details before the Assessing Officer as well in uploaded details in the e-proceedings portal during assessment proceedings and thus penalty of Rs. 10,000 levied against the assessee by the Assessing Officer under section 271(1)(b) was deleted. (AY. 2016-17)

Suresh Mutha v. ACIT (2020) 78 ITR 75 (SN) (Chennai)(Trib.)

===>(Chennai)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Failure to furnish details of persons from whom donations received-Not a case of concealment of income or furnishing inaccurate particulars of income-Penalty not leviable.[S. 11, 132]

Tribunal held that the assessee had disclosed the entire receipt of donations. However the Assessing Officer found that it was not a voluntary donation but anonymous donation. When the assessee had disclosed the entire receipt and the expenditure and claimed the receipt was exempted under section 11, merely because the assessee could not furnish the details of the persons from whom the donations were received, could not be a reason for concluding that the assessee had concealed any part of income or furnished inaccurate particulars. Making a statutory claim under section 11 could not be construed as furnishing inaccurate particulars.(AY.2011-12 to 2014-15)

Meenakshi Ammal Trust v. ACIT (2020) 78 ITR 138 / 186 DTR 257 / 203 TTJ 785 (Chennai)(Trib.)

===>(Chennai)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Not recording of satisfaction-Penalty is held to be not valid.

Allowing the appeal of the assessee the Tribunal held that when the AO initiated penalty proceedings and sought for explanation, the assessee explained his transactions and brought to the notice of the Assessing Officer that the transactions were undertaken through banking channels. Therefore, the assessee prima facie placed relevant materials and explained the transaction. The penalty proceedings being a separate proceeding, if at all, the Assessing Officer intended to levy penalty, he is bound to record satisfaction that the explanation offered by the assessee is false. Since the Assessing Officer had not recorded such findings, the penalty levied was unsustainable and liable to be deleted. (AY.2016-17)

Gurusamy Ramamurthy v.ITO (2020) 81 ITR 9 (Chennai)(Trib.)

===>(Chennai)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Charitable Trust-Donation-Details of the persons from whom the donations were received could not be furnished-Levy of penalty is held to be not valid. [S. 11]

Allowing the appeal of the assessee the Tribunal held that,the assessee has disclosed the entire receipt of donations. However the AO found that it is not a voluntary donation but anonymous donation. The fact that the assessee has disclosed the entire donation and claimed exemption U/s. 11 of the Act is not in dispute. When the assessee has disclosed the entire receipt and the expenditure and claimed the same as exempted U/s.11 of the Act, merely because the assessee could not furnish the details of the persons from whom the donations was received, cannot be a reason for concluding that the assessee concealed any part of income or furnished inaccurate particulars. Making a statutory claim U/s.11 of the Act cannot be construed as furnishing inaccurate particulars. Accordingly the penalty levied is deleted. (AY. 2011-12 to 2014-15)

Meenakshi Ammal Trust v. ACIT (2020) 186 DTR 257 / 78 ITR 138 / 203 TTJ 785 (Chennai)(Trib.)

===>(Cochin)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Show cause notice-Charge not specified-Concealment of income or inaccurate particulars of income-Levy of penalty is not justified-Monetary limit less than 50 lakhs-Appeals of revenue was dismissed. [S. 253, 268A, 274]

Dismissing the appeal of the revenue the Tribunal held that, where the Assessing Officer had not struck down irrelevant portion in show-caause notice and it was not clear whether penalty levied was for concealment of income or furnishing inaccurate particulars of income. Deletion of penalty is held to be justified. Tribunal also held that monetary limit less than 50 lakhs the appeals of revenue was dismissed, followed Circular No 3/2018 dt 11-7-2018. (AY. 2000-01 to 2004-05)

ITO v. A. Shihabudeen (2020) 182 ITD 91 / 79 ITR 280 (Cochin)(Trib.)

===>(Cochin)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Not specifying the charge-Valuation estimation-Levy of penalty is not justified-Below monetary limit-Department is precluded from filing an appeal before Appellate Tribunal. [S. 253, 274]

Tribunal held that the Assessing Officer had not struck out the irrelevant portion in the notice. It was not clear whether he had levied the penalty for concealment of particulars of income or furnishing of inaccurate particulars of income. In the penalty order also, it was not clear that whether he had levied the penalty for concealment of income or furnishing inaccurate particulars of income. The penalty was levied by the Assessing Officer on account of unexplained investments in construction of building, on receipt of valuation report from the District Valuation Officer and the addition was not related to any items mentioned in para 10(d) of the Circular No. 3 of 2018 dated July 11, 2018 (2018) 405 ITR 29(St.). This being so, the Department was precluded from filing the appeal since the monetary limit for filing the appeal before the Tribunal was Rs. 50 lakhs, as prescribed by the Central Board of Direct Taxes. There was no evidence to show that the assessee had understated the construction expenses in its accounts. The only basis for the addition in the assessment as well as for the levy of penalty was the Department Valuer’s estimated figure. A valuation estimate, without more, could not justify a finding of concealment(AY.2000-01 to 2004-05)

ITO v. A. Shihabudeen (2020) 79 ITR 280 / 182 ITD 91 (Cochin)(Trib.)

===>(Cuttack)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Receipt of additional income not disclosed prior to search-Levy of penalty is justified-AO not sure on which count he intends to levy penalty-Two situations contradictory to each other-Returned and assessed income the Same and revised income accepted-Levy of penalty is not justified. [S. 132, 153A]

Tribunal held that that both the two previous years had ended before the date of search. In the returns filed in response to the notice under S. 153A the assessee claimed that additional income had been received by him and the income was not declared by him in the returns filed before the date of search. Therefore the provisions of Explanation 5A to S. 271(1)(c) were applicable on account of concealment of particulars of his income or furnishing of inaccurate particulars of income because all the conditions laid down in Explanation 5A were met and the deeming provisions of S. 271(1)(c) were clearly applicable to the assessee. The assessee had concealed particulars of his income to the extent of additional income received by him. The assessee could not bring any cogent material to controvert the findings of the authorities. Accordingly, the penalty was justified for the assessment years 2010-11 and 2011-12.

The AO for the AYs 2012-13 to 2015-16 initiated penalty proceedings under S. 271(1)(c) on the differential amount disclosed in the return filed under S. 153A by the assessee without mentioning either of the two limbs as provided under the provisions of S. 271(1)(c), i. e., for concealment of particulars of income or for furnishing of inaccurate particulars of such income. In the penalty order also he used both the expressions. The CIT(A) confirmed the penalty. On appeal the Tribunal held that the AO was not sure on which count he intended to levy penalty under the provisions of S. 271(1)(c) either for concealment of particulars of income or for furnishing of inaccurate particulars of such income. These two situations were contradictory to each other. Neither the assessment order nor the penalty order stated the specific charge of concealment or furnishing of inaccurate particulars of income. In all the cases, both the returned income and the assessed income was the same. Therefore, when the revised return was accepted and the income was assessed as per the revised return, there was no scope for penalty. The penalty levied by the AO which is confirmed by the CIT(A) is held to be not valid. (AY.2010-11 to 2015-16)

Dr. Subash Chandra Jena v. ACIT (2020) 77 ITR 44 (SN) (Cuttack)(Trib.)

===>(Delhi) (Trib) S. 271(1)(c) :- Penalty-Concealment-Loan against property-interest capitalized-Inadvertently claimed in the return as deduction-Levy of penalty is not valid.

Tribunal held that the assessee had explained before the Assessing Officer and the Commissioner (Appeals) that the business activity of the assessee was investment in real estate business and the activity constituted the business activity. The Assessing Officer and the Commissioner (Appeals) had proceeded on the basis that there was no income during the year 2015-16 and therefore there was no business activity, but this was a fallacy and could not be taken as the basis for imposing penalty. Thus, the provisions of section 271(1)(c) were not applicable in the present case. Hence, the penalty order were not sustainable. (AY. 2015-16)

UMG Properties P. Ltd. v.ACIT (2020) 80 ITR 448 (Delhi) (Trib.)

===>(Delhi)(Trib.) S. 11 :- Property held for charitable purposes-Object of promoting growth of Automobile Industry In India and also to improve and protect environment-Entitled to exemption-Corpus fund-Amount transferred is not application of income-Foreign grants-Pending for approval-Characterisation of receipt as taxable income only at time of appropriation and not at time of receipt-Not income of assessee-No quantum additions-Penalty not leviable. [S. 2(15), 12, 12A, 271(1)(c), Foreign Contribution (Regulation) Act of 2010, S.11 (1)]

Tribunal held that the Object of promoting growth of Automobile Industry In India and also to improve and protect environment-Entitled to exemption. Followed, Society of Indian Automobile Manufacturers v. ITO (E) (I. T. A. No. 4837/Delhi/2012 dated June 6, 2016).

Tribunal also, that the assessee while drawing up the excess of expenditure carried forward the amounts and the balance as excess income over expenditure. In the schedule to the balance-sheet the amount of Rs. 90 lakhs was transferred to corpus funds with the narration “transfer from income and expenditure account, i. e., for Rs. 90 lakhs”. Similarly, amounts were transferred to different funds. The assessee had very clearly pointed out that all these amounts which were transferred to funds were not to be considered as application of income and accordingly, the income had been computed in the hands of the assessee. There was no merit in the exercise undertaken by the Assessing Officer, which had been confirmed by the Commissioner (Appeals). The Assessing Officer was directed to delete the addition made in the hands of the assessee. As regards Foreign Contribution the Tribunal held that section 11(1) of the Foreign Contribution (Regulation) Act of 2010 very clearly provides that no person shall accept foreign contributions unless such person has obtained a certificate from the Central Government. Further, sub-section (2) provides that foreign contribution is to be utilised for specific purpose only after obtaining appropriate permission of the Central Government. Thus, the assessee did not have the authority to utilise the sum received by it as foreign contribution though it was credited to its bank account. Similarly, the bank interest earned on such deposits was in the form of foreign contribution and specific approval for utilisation thereof had to be given by the Central Government. The characterisation of a receipt could taxable only at the time of appropriation and not at the time of receipt which at best was advance received, which did not bear any particular characterisation for the purpose of treating it as income. The foreign grant as pending approval could not be included as income of the assessee. Relied on CIT v. Om Prakash Khaitan(201) 376 ITR 390 (Delhi)(HC). As no addition was confirmed levy of penalty was deleted for the AY. 2009-10.(AY. 2009-10, 2010-11)

Society for Indian Automobile Manufacturers v. ITO(E) (2020) 82 ITR 279 (Delhi)(Trib.)

===>(Delhi)(Trib.) S. 271(1)(b) :- Penalty-Failure to comply with notices-Entire additions deleted at appellate stage-Bona fide explanation-Penalty not leviable. [S. 142(1)]

Tribunal held that when the entire additions were deleted at appellate stage and the explanation of the assessee being bonafide, levy of penalty is held to be not valid. (AY.2005-06 to 2009-10)

Sanjay Tyagi v. Dy. CIT (2020) 82 ITR 44 (SN) (Delhi)(Trib.)

===>(Delhi)(Trib.) S. 271(1)(c) :- Penalty - Concealment -Assessee’s good faith cannot be disproved - Transaction is held to be at ALP - Levy of penalty is held to be not justified .[ S.92CA (3) ]

From the given facts it cannot be said that there was any surreptitious mechanism embarked upon by the assessee nor it can be said that the assessee failed to exercise their transactions with all the due diligence. In the present case the assessee has prepared its TP report in good faith and with due care. There is nothing on record to disprove the good faith and the due diligence discharged by the assessee in determining the ALP of transactions in the TP report submitted by the assessee. Therefore, it was held that Explanation 7 to section 271(1)(c) is not attracted in the present case, and hence, it is not a fit case for levying the penalty u/s 271(1)(c). Appeal of revenue was dismissed . ( AY. 2006 -07)

ITO v. Tianjin Tianshi India P. Ltd. (2020) 189 DTR 26 / 205 TTJ 107 (Delhi)(Trib.)

===>(Delhi)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Failure to deduct tax at source-Transfer pricing adjustments-Explanation 7-Deletion of penalty is held to be justified. [S. 92C]

The Assessing Officer levied the penalty on TP adjustment. On appeal CIT(A) held that provisions of Explanation 7 to Section 271(1)(c) are not attracted.. On appeal by the revenue the Tribunal held that the assessee has prepared its TP report in good faith and with due care. There is nothing on record to disprove good faith and due diligence discharged by assessee in determining ALP of transactions in TP report submitted by assessee. Accordingly Explanation 7 to section 271(1)(c) is not attracted. Appeal of revenue was dismissed.

ITO v. Tianjin Tianshi India P. Ltd. (2020) 189 DTR 26 / 205 TTJ 107 (Delhi)(Trib.)

===>(Delhi)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Show-cause Notice and penalty order not specifying the charge-Levy of penalty is held to be not valid. [S. 274]

Tribunal held that the appeal, that the Assessing Officer had initiated the penalty proceedings in the assessment order both on the counts of concealment of income as well as of furnishing of inaccurate particulars of income. In the show-cause notice under section 274 also neither of the two charges was struck out. In the penalty order also the penalty was levied for both defaults. The penalty levied by the Assessing Officer was not sustainable in law. (AY. 2012-13)

Sequel Alloys and Wires Pvt. Ltd. v. Dy. CIT (2020) 83 ITR 190 (Delhi)(Trib.)

===>(Delhi)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Failure to specify the charge, which limb penalty proceedings initiated-Penalty quashed.

Tribunal held that the notice issued before levy of the penalty, the Assessing Officer had mentioned “have concealed the particulars of your income or furnished inaccurate particulars of such income in terms of Explanations 1, 2, 3, 4 and 5.” The notice clearly showed that it had not specified under which limb of section 271(1)(c) of the Act the penalty proceedings had been initiated, whether for concealment of particulars of income or furnishing inaccurate particulars of income. The entire penalty proceedings were, therefore, vitiated and no penalty was leviable. Further, the Assessing Officer in the assessment order had not recorded any satisfaction under which limb of section 271(1)(c) of the Act the penalty proceedings had been initiated. The Assessing Officer merely mentioned at the bottom of the assessment order after computing the income that penalty proceedings under section 271(1)(c) of the Act had been initiated separately. Thus, there was violation of the law in the matter. Hence, there was no justification to levy the penalty under section 271(1)(c) of the Act against the assessee. The orders of the authorities were to be set aside and the penalty was to be deleted. (AY. 1996-97)

Raj Kumar v. ITO (2020) 82 ITR 509 (Delhi)(Trib.)

===>(Delhi)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Disallowance of professional fees and interest on borrowed capital-Levy of concealment penalty is held to be not valid. [S. 36(1)(iii), 37(1)]

Allowing the appeal of the assessee the Tribunal held that, since assessee had furnished all particulars related to its claim of expenditures towards professional fees and interest paid on capital borrowed and none of evidences filed by assessee were incorrect, merely because issue was decided against assessee by instant court by confirming disallowance of these expenses, it could not result into levy of penalty. (AY. 2010-11)

Quippo Telecom Infrastructure (P.) Ltd. v. ACIT (2020) 185 ITD 275 / (2021) 198 DTR 202 / 2009 TTJ 828 (Delhi)(Trib.)

===>(Delhi)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Failure to specify the specific charge in the show cause notice-Penalty levied was quashed.

Allowing the appeal the Tribunal held that the show-cause notices issued by the Assessing Officer did not specify under which limb of section 271(1)(c) of the Act the penalty proceedings had been initiated, i. e., whether for concealment of particulars of income or furnishing inaccurate particulars of income. Therefore, since the issue of notice itself was bad in law, the entire penalty proceedings were vitiated and the penalty proceedings were liable to be quashed.(AY.2009-10 to 2012-13)

Akhil Meditech Pvt. Ltd. v. CIT (2020) 83 ITR 68 (SN) (Delhi)(Trib.)

===>(Delhi)(Trib.) S. 271(1)(c) :- Penalty-Concealment-No specific charge recorded-addition on estimate basis-Appeal not filed against quantum addition-Levy of penalty is not justified. [S. 274]

Allowing the appeal the Tribunal held that the Assessing Officer had not raised any specific charge against the Assessee. The assessment order did not record a specific charge whether the assessee had concealed income or had furnished inaccurate particulars of income. The notice issued under S.274 was also silent on this issue, and the Assessing Officer had levied the penalty on concealment of income without confronting the assessee with any specific charge. The addition made on estimate basis. Levy of penalty is held to be not justified.PCIT v. Sahara India Life Insurance Co Ltd. (ITA. No. 475 of 2019 dt. 2.8. 2019 (Delhi) relied.(AY. 2012-13)

Arvind Kumar Arora v. ITO (2020)82 ITR 28 (SN) (Delhi)(Trib.)

===>(Delhi)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Disallowance of service tax-Nether debited to profit and loss account nor claimed as expenditure-levy of penalty is held to be not justified. [S .43B]

Allowing the appeal of the assessee the Tribunal held that merely disallowance of service tax under section 43B of the Act when nether debited to profit and loss account nor claimed as expenditure, levy of penalty is held to be not justified. (ITA No. 3915 / Delhi/ 2016 dt.15-6-2020) (AY. 2011-12)

C.S. Datamation Research Pvt. Ltd. v. ITO (2020) BCAJ-July-P. 48 (Delhi)(Trib.)

===>(Delhi)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Employee Stock ownership Plan-Tax was deducted at source-Mistake of tax consultant-No intention to conceal income or deliberate default on part of assessee-Levy of penalty is not justified.

Allowing the appeal the Tribunal held that the the assessee had been out of India and had been receiving salary from three different employers and the returns had been prepared by a consultant. The tax deducted at source on the salary had been already deducted and deposited to the Department. Further, the employee stock ownership plan (ESOP) amount was a non-cash transaction and on which the tax deducted at source had also been deducted and form 26AS clearly showed the tax deducted at source. Keeping in view the facts of the case, that the assessee had been in different jobs and out of India, and that the returns had been prepared by a consultant, the explanation of the assessee could fairly substantiate that such explanation was bona fide and the material relevant to the computation of the total income had been disclosed by him. In the absence of any deliberate default on the part of the assessee, no penalty under S. 271(1)(c) of the Act was leviable. Since there was no intention of the assessee to conceal the income, the penalty levied was to be deleted. (AY.2011-12)

Sushil Kumar Bhati v. ITO (2020) 81 ITR 218 (Delhi)(Trib.)

===>(Delhi)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Recording of satisfaction-Failure to state specific charge of penalty-Penalty deleted. [S. 274]

The Tribunal held that the Assessing Officer had not recorded his satisfaction for initiation of penalty proceedings, but merely stated that the penalty proceedings under section 274 read with section 271(1)(c) had been issued separately for concealment of income and furnishing of inaccurate particulars of such income. This was not sufficient and therefore, the penalty proceedings could not said to be validly initiated. Similarly, in the penalty order passed under section 271(1)(c) of the Act, the Assessing Officer had mentioned that it was a case of deliberate concealment of income by furnishing inaccurate particulars. This was not sufficient to levy the penalty in dispute. Therefore, the entire penalty proceedings stood vitiated, because it was not in accordance with law. The penalty imposed was to be deleted. (AY.2003-04)

Hindon Forge P. Ltd. v. Dy. CIT (2020) 80 ITR 545 (Delhi)(Trib.)

===>(Delhi)(Trib.) S. 271AAA :- Penalty-Search initiated on or after 1st June, 2007-Concealment-Additions deleted-Penalty does not survive-Notice not mentioning specific limb of explanation-Penalty not imposable. [S. 274]

Tribunal held that since the Commissioner (Appeals) giving relief to the assessee on various additions had attained finality in view of the dismissal of the appeal filed by the Revenue before the Tribunal and the various additions of income had been set aside for the assessment year, there was no question of imposing penalty. The Department’s appeal did not survive. Tribunal also held that the notice issued under section 274 read with section 271AAA did not mention the particular limb of the Explanation to section 271AAA under which penalty was proposed to be levied. Rather, the notice reproduced the language of section 271(1)(c) and not section 271AAA. Therefore, the notice was vague and had to be treated as invalid. Since the notice clearly showed non-application of mind on the part of the Assessing Officer and there was no specific ground on which the penalty proceedings had been initiated, the notice issued under section 274 read with section 271AAA was bad in law and, therefore invalid. (AY. 2012-13)

ACIT v. Sanjiv Gupta (2020) 84 ITR 29 (Delhi)(Trib.)

===>(Indore) (Trib.) S. 271(1)(b) :- Penalty-Failure to comply with notices-Co-operating in assessment proceedings Attending-None of assessment orders ex-parte-Levy of penalty is held to be not valid. [S. 142(1)]

Tribunal held that having failed to appear on the initial date of hearing, subsequently complied with the notice issued under S. 142(1) on subsequent dates. Based on the Compliances the assessments were completed. None of these assessments were ex-parte. Accordingly the penalty levied was deleted. (AY.2010-11 to 2016-17)

Manu Rai (Smt.) v. Dy.CIT (2020) 82 ITR 22 (SN) (Indore) (Trib.)

Manish Rai v. Dy.CIT (2020) 82 ITR 22 (SN) (Indore)(Trib.)

Meena Devi Rai (Smt.) v. Dy.CIT (2020) 82 ITR 22 (SN) (Indore) (Trib.)

===>(Indore)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Disallowance of expenses-Amount debited in profit and loss account-Neither concealment of income nor furnishing inaccurate particulars of income-Penalty not warranted. [S.14A, R. 8D]

Tribunal held that the assessee had shown all the expenses in the profit and loss account and there was no rejection of books of account and there was no such finding in the penalty order or the appellate order. There was no mandatory rule that for earning exempt income the assessee had to incur any expenditure. It is only when the Assessing Officer is satisfied about the type and amount of expenses which have been incurred specifically for earning the exempt income and had been debited to the profit and loss account for claiming expense against the revenue liable to be taxed. In the instant case the disallowance under section 14A was on estimated basis made proportionately out of the finance charges. There was no case of concealment of particulars of income or furnishing of inaccurate particulars of income since the amount had been duly debited as expenses in the profit and loss account. Since no intention or mens rea on the part of the assessee was apparent on the face of the record the Assessing Officer was not justified in levying the penalty (AY.2006-07)

Unique Ways Management Service P. Ltd. v. ACIT (2020) 79 ITR 11 (SN) (Indore)(Trib.)

===>(Jaipur) (Trib.) S. 271(1)(c) :- Penalty-Concealment-Not specifying a specific charge-Levy of penalty is not valid. [S. 69B]

Tribunal held that while issuing the notice under section 271(1)(c), the specific charge in terms of concealment of particulars of income or furnishing of inaccurate particulars of income was not ascertainable. Even while passing the penalty order, the Assessing Officer had not given a clear and specific finding how it was a case of concealment of income as well as furnishing of inaccurate particulars of income. Once the return filed under section 153A had been accepted by the Assessing Officer, it could not be a case of furnishing inaccurate particulars of income. It may be a case of concealment of income where the income had been found basis search proceedings conducted at the premises of the assessee.(AY.2008-09 to 2013-14)

Laxman Nainani v. Dy. CIT (2020) 80 ITR 1 (Jaipur) (Trib.)

===>(Jaipur)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Not specifying the charge-Notice vague-Levy of penalty not sustainable. [S. 274]

Tribunal held that in the notice issued to the assessee the Assessing Officer had levied a charge of concealing the particulars of income or furnishing inaccurate particulars of such income. Neither the assessee nor anyone else could make out whether the notice under section 274 read with section 271 was issued for concealing the particulars of income or for furnishing inaccurate particulars of such income disabling it to meet the case of the Assessing Officer. The jurisdictional notice was vague and the consequent levy of penalty could not be sustained.(AY.2009-10)

Rajendra Kumar Khandelwal v. Dy.CIT (2020) 78 ITR 252 (Jaipur)(Trib.)

===>(Jaipur)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Addition set aside Levy of penalty is held to be not valid-Not specifying the charge-Levy of penalty is not valid-Penalty on account of deemed concealment is unsustainable as the Assessing Officer has not made any reference to any incriminating material or income declared by the assesssee. [S. 132(4), 153A, Explanation 5, 274]

Tribunal held that as regards the addition made by the Assessing Officer on account of disallowance of certain expenses since this issue had been set aside by the Tribunal to the record of the Assessing Officer, the addition itself was no more in existence and consequently the penalty levied under section 271(1)(c) in respect of such addition would not survive. Tribunal held that the show-cause notice itself suffered from illegality of not specifying the default or charges for which the penalty proceedings were proposed to be initiated by the Assessing Officer. Even in the penalty order, the Assessing Officer had levied the penalty in respect of the amount surrendered by the assessee as well as the additions made by him in the assessment proceedings. Even in the concluding part the Assessing Officer was not sure about the charge and default of the assessee for which the penalty was levied under section 271(1)(c). The Assessing Officer had failed on both the counts as neither at the time of initiation of penalty proceedings nor at the time of passing the penalty order has specified the charge. Tribunal also held that

Explanation 5A to section 271(1)(c) was a deeming fiction which could not be extended beyond the scope of the provision. Only when the conditions prescribed under Explanation 5A and particularly the income representing money, bullion, jewellery or other valuable article or thing or income based on any entry in any books of account or other record was found, would Explanation 5A be attracted and the assessee could not escape from the mischief of the penalty provision under section 271(1)(c) merely because the income was declared in the return filed after search. The Assessing Officer had even not made any reference to any incriminating material so as to bring the income declared by the assessee in the return filed in response to the notice under section 153A within the ambit of Explanation 5A to section 271(1)(c). Accordingly, Explanation 5A to section 271(1)(c) would not be applied in the case of the assessee. (AY.2010-11, 2011-12, 2012-13) Dy.CIT v. Prakash Chand Sharma (2020) 79 ITR 386 (Jaipur)(Trib.)

===>(Luck.)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Notice not specifying charge-Natural justice-Show-cause notice void ab initio-Levy of penalty is not valid. [S. 274]

Tribunal held that, assessee and the charge against the assessee in the assessment order as well as in the penalty notice was nebulous and the assessee was unable to understand the purport and import of the notice issued under section 274 read with section 271. Therefore, the principles of natural justice had been flagrantly violated. Thus the show-cause notice, which did not specify the charge and limb under which the penalty was proposed to be levied, was void ab initio and the consequent penalty imposed on the basis of such notice was illegal and bad in law and liable to be deleted. (AY. 2014-15) Risha Tour And Travels v. ITO (2020) 78 ITR 77 (Luck.)(Trib.)

===>(Mum)( Trib) S. 271(1)(c) :- Penalty - Concealment - Notice -Not specifying the charge - Quantum appeal admitted before High Court - Penalty was deleted . [ S.274 ]

In the present case, considering the observations of the Assessing Officer in the assessment order alongside his action of non-striking off of the irrelevant clause in the notice shows that the charge being made against the assessee qua S. . 271(1)(c) of the Act is not firm and, therefore, the proceedings suffer from non-compliance with principles of natural justice.the penalty is not leviable in accordance with law. Also on the ground that quantum appeal is admitted and pending before High Court to decide on merit . (AY. 2010-11)

Jamsetji Tata Trust v. ACIT (2020) 208 TTJ 303 (Mum)( Trib)

===>(Mum)(Trib) S. 271(1)(c) :- Penalty - Concealment- disallowance u/s 10A - only on presumption basis - Not due to inaccurate information - Penalty was deleted[ S.10A ]

The assessee has challenged imposition of penalty under section 271(1)(c). It was noted that the addition/disallowance made by Revenue on account of deduction claimed under section 10A of the Act is not due to any inaccurate particulars furnished by the assessee but on a purely presumptive basis. Thus, the penalty was accordingly deleted. (AY. 2006 -07, 2008 -09, 2009 -10 )

Auro Gold Jewellery Pvt. Ltd. v. Dy. CIT (2020) 192 DTR 89 / 204 TTJ 1005 (Mum)(Trib)

===>(Mum.)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Depreciation on digital set top box and control room equipment at sixty per cent-Restricted to fifteen per cent-Levy of penalty is not valid.

Allowing the appeals the Tribunal held that the declining of the claim of depreciation at 60%on digital set top box and control room equipment at sixty per cent and restricted to fifteen per cent, levy of penalty is held to be not valid.(AY. 2011-12, 2014-15)

Abs Entertainment Pvt. Ltd. v. Dy. CIT (2020) 84 ITR 20 (SN) (Mum.)(Trib.)

===>(Mum.)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Search cases-Income declared in return filed-Levy of penalty is held to be not valid-Not mentioning the specific offence committed-Levy of penalty is held to be not valid. [S. 132(4), 153A]

The Tribunal held that the assessee duly disclosed the transactions reflected in the diaries in the returns filed pursuant to the notice under section 153A and paid taxes thereon. Hence, all the three conditions for claiming immunity from levy of penalty, viz., declaration made under section 132(4) by duly substantiating the manner in which such undisclosed income was derived ; including those undisclosed income in the return filed under section 153A and the payment of taxes thereon, were duly complied with by the assessee in the instant case. Hence, the case of the assessee fell within clause 2 of Explanation 5 to section 271(1)(c) wherein immunity from levy of penalty is squarely provided in the statute itself. In respect of penalty on additions made during the course of assessments for the three assessment years, i. e., assessment years 2001-02, 2003-04 and 2007-08, the penalty was to be deleted because the Assessing Officer had not mentioned the specific offence committed by the assessee in the quantum assessment order (thus improperly recording satisfaction) and also for initiating penalty under one limb and levying penalty under the other limb of the alleged offence. By this, the penalty levied for the three assessment years in the sum was deleted.(AY.2001-02 to 200708)

Jayant B. Patel HUF v. Dy.CIT (2020) 80 ITR 44 (SN) (Mum.)(Trib.)

===>(Mum.)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Arbitration award-dredging contract-Annexed a Note in ITR based on relevant DTAA that said amount was not taxable in India-Levy of penalty is held to be not justified-DTAA-India-Netherland-In computing time limitation for pronouncement of order by Tribunal, nation wide COVID 19 lockdown period was to be excluded. [S. 28(i), 255, ITAT R. 34, Art. 5, 7,]

Pursuant to a dredging contract awarded by New Mangalore Port Trust (NMPT) in 1994, assessee Dutch Company opened a site office there and upon completion of project in 1995-96, assessee closed it. Appellant made claims on NMPT for additional work performed while NMPT made counter claim for loss due to delay in completion of contract. In 1998, Arbitral award was passed in favour of appellant. Ultimately issue reached before High Court, but NMPT withdrew its appeal and in September, 2000, paid assessee Rs. 30.79 crores. In return of income, this amount was reduced from business profit for determining taxable income. In support of its stand, assessee annexed a Note that relying upon content of India-Netherlands Treaty said amount was not taxable-Assessee's contention, based on Article 5, read with article 7 of DTAA, was that amount of said arbitration award was not taxable in India since there was no permanent establishment in India in Financial Year 2000-01 for NMPT project. Tribunal held that though such explanation had not been found to be false by authorities below, same was not, however, found tenable by them,said amount was brought to tax and penalty proceeding had been initiated. Tribunal held that since explanation given by assessee was supported by rational supporting evidences, bonafides should be taken as proved. Accordingly the penalty was deleted. Tribunal also held that in computing time limitation for pronouncement of order by Tribunal, nation wide COVID 19 lockdown period was to be excluded.(AY. 2001-02)

Van Oord Dredging and Marine Contractors BV v. ADIT (2020) 184 ITD 750 / 191 DTR 276 / 206 TTJ 386 (Mum.)(Trib.)

===>(Mum.)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Disallowance of set-off of loss from purchase and sale of shares treating it as speculation loss-Disallowance of claim-Penalty not sustainable. [S. 73]

The Tribunal held that the mere disallowance or disagreement of a claim could not be the basis for levy of penalty and the addition made in the assessment order by the Assessing Officer could not be a gateway for automatic levy of penalty. The penalty could not be automatic. The claim of the assessee was in consideration of the financial statements and the assessee adopted one of the possible views that the business loss could be set off against the income from other sources. The assessee had made a claim under the bona fide belief that it was allowable under the law. The penalty was not sustainable. (AY.2005-06)

TIL Investments P. Ltd. v. ITO (2020) 83 ITR 77 (SN) (Mum.)(Trib.)

===>(Mum.)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Disallowance of expenses on estimate basis-Capital or revenue-Debatable issue-Levy of penalty is not justified-Disallowance was deleted-Levy of penalty is not justified. [S. 14A]

Tribunal held that when the disallowance of expenses on estimate basis and also on the issue whether allowable as revenue or Capital being a debatable issue, levy of penalty is not justified. Tribunal also held that when the disallowance was deleted, the Levy of penalty is not justified. (AY.2002-03)

Piramal Healthcare Ltd. v. Dy. CIT (2020)82 ITR 47 (SN) (Mum.)(Trib.)

===>(Mum.)(Trib.) S. 271(1)(c) :- Penalty-Concealment of income-Addition on basis of which penalty levied was deleted-Penalty will not survive.

Dismissing the appeal of the revenue the Tribunal held that, addition on basis of which penalty levied was deleted. Penalty will not survive. (AY.2011-12, 2012-13)

Dy. CIT v. Galderma India Pvt. Ltd. (2020) 80 ITR 452 (Mum.)(Trib.)

===>(Mum.)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Disallowance of expenditure-Deletion of penalty is held to be valid.

Dismissing the appeal of the revenue the Tribunal held that,where facts are on record and all information relating to expenditure has been fully disclosed in the financial statements and there is only a difference of opinion between the assessee and the AO regard the nature of expenditure. Deletion of penalty is held to be justified. (ITA No 1978 /Mum/2018 dt 11-10-2019) (AY. 2012-13)

DCIT v. Akruti Kailash Construction (2020) BCAJ-January-P.34 (Mum.)(Trib.)

===>(Mum.)(Trib.) S. 271AAB :- Penalty-Search initiated on or after Ist day of July 2012-Concealment-Search and seizure-Undisclosed income-Disallowances cannot automatically lead to penalty-levy of 10% penalty is held to be not valid. [S. 132, 271(1)(c)]

Allowing the appeal the Tribunal held that disallowances cannot automatically lead to penalty.The assessee had made full and true disclosure in its return of income and furnished the full particulars of income. No information given in the return was found to be incorrect. All the expenses were genuine business expenses, paid by account payee cheques, and were properly accounted for in the regular books of account. Therefore, penalty could not be levied. (AY.2013-14)

Ajanta Pharma Ltd. v. Dy. CIT (2020) 77 ITR 555 / 187 DTR 159 / 204 TTJ 241 (Mum.)(Trib.)

===>(Pune) (Trib.) S. 271(1)(c) :- Penalty-Concealment-Claim supported by various decisions and documentary evidence-Levy of penalty is held to be not valid.

Tribunal held that the assessee had incurred expenditure under the heads repairs and collection charges, expenditure on tourist buses and interest on housing loan. The Department had not questioned the genuineness of the expenditure. Even at the time of hearing, the Department did not produce any evidence suggesting that the assessee had not incurred these expenses. Therefore, these expenses were genuine. All the facts were disclosed and the claim was made for deduction on expenditure incurred by the assessee. As per record the assessee had made a bona fide claim. The Assessing Officer as well as the Commissioner (Appeals) had not challenged the genuineness or bona fides of the expenditure so incurred. The claim of the assessee was also supported by various decisions and documentary evidence placed on the record. Thus, penalty could not be levied where a bona fide claim of the assessee was rejected by the Department. This was not a fit case for levy of penalty under section 271(1)(c).(AY.2013-14)

Kumudini V. Gavit (Smt.) v. ITO (2020) 80 ITR 30 (SN) (Pune) (Trib.)

===>(Pune)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Penalty initiated under both limbs-Penalty levied for concealment of income-Levy of penalty is held to be not valid.

Tribunal held that the penalty was initiated under both limbs of section 271(1)(c) of the Income-tax Act, 1961 whereas in the assessment order the penalty was only initiated for concealment of income. There was an ambiguity in the mind of the Assessing Officer while imposing penalty. Whenever penalty is to be imposed, the assessee must have a chance of self-defence, under the principles of natural justice and in this, since satisfaction was not recorded by the Assessing Officer it was obvious that the assessee was unable to prepare her defence whether penalty was imposed for concealment or furnishing of inaccurate particulars of income. In such circumstances, there could not be any imposition of penalty under section 271(1)(c). Accordingly the penalty was cancelled.

Vimalaben B. Patel (Smt.) v. ITO (2020) 79 ITR 25 (SN) (Pune)(Trib.)

===>(Pune)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Capital gains-Bonafide belief-Sale not complete-Failure to disclose capital gains-Levy of penalty is held to be not justified. [S. 45]

Tribunal held that the buyer and the seller had agreed that they would present the cheques in October, 2010 whereas the Reserve Bank of India put restrictions on the functioning of the bank with effect from September 24, 2010. Due to the bank being in critical financial condition and the restrictions imposed on the bank by the Reserve Bank of India no payment was realised in the year 2011-12. The assessee was under the bona fide belief that since he had not received any consideration during the relevant year, the sale was not complete and no profits accrued to him. The procedure of imposition of penalty under section 271(1)(c) shall arise only if there was any concealment of income or furnishing of inaccurate particulars of income. To determine these factors, the facts and circumstances are essential. The facts did not suggest even remotely that the assessee had concealed his income. Rather the assessee had acted under a bona fide belief and the Department had not placed on record any evidence of receipt of income regarding one-fourth share of the property by the assessee in the relevant year. Neither there was mens rea nor actus reus on the part of the assessee. Therefore this was not a fit case for imposition of penalty under section 271(1)(c) and the Assessing Officer was directed to delete the penalty. (AY. 2011-12)

Ravindra Anant Bhuskute v. ITO (2020)81 ITR 40 (SN) (Pune)(Trib.)

===>(Pune)(Trib.) S. 271F :- Penalty-Return of income-Failure to furnish-Depression and under continuous medical treatment-Reasonable cause-Levy of penalty is held to be not valid. [S. 139(1), 271(1)(b)]

Tribunal held that in the entire scheme of the Act concerning penal provisions specifically section 139(1) read with section 271F of the Act, the facts and circumstances and the reasonableness have always to be considered. The genuineness of the problem faced by the assessee had not been disputed by the Department. The provisions of section 271F of the Act were not so stringent that if section 139(1) of the Act was not complied with, penalty would be levied irrespective of any practical or reasonable situations brought on record. The Department had failed to conduct any specific enquiry as regards whether the facts stated by the assessee were correct or not. The facts on record and had not been disputed by the Department. Considering the totality of the facts and circumstances, this was not a fit case for imposing penalty under section 271F of the Act.(AY.2009-10 to 2011-12)

Rupali Sanjay Bedmutha (Smt.) v. ITO (2020) 83 ITR 30 (SN) (Pune)(Trib.)

===>(Rajkot)(Trib.) S. 271(1)(c) :- Penalty-Concealment-Estimate of income-Satisfaction-8% of contractual receipts-Levy of penalty is held to be not justified.

Assessing Officer also passed a penalty order for furnishing inaccurate particulars of income. Allowing the appeal of the assessee the Tribunal held that when income of assessee is determined on estimate basis then no penalty under section 271(1)(c) can be imposed for concealment and furnishing inaccurate particulars of income. Tribunal also held that penalty order was silent on issue as to how satisfaction of concealment/furnishing of inaccurate particulars was arrived at. Accordingly the penalty order was set aside. (AY. 2013-14)

Anil Abhubhai Odedara v. ITO (2020) 183 ITD 313 (Rajkot)(Trib.)