2020 (12) TMI 252 - AT - Income Tax

Penalty u/s 271(1)(c) - no approval from the Joint/Additional Commissioner of Income Tax taken before issuing notice - HELD THAT - In the present case no approval from the Joint/Additional Commissioner of Income Tax was sought therefore the penalty levied by the A.O. was not justified. In the present case it appears that the penalty of Rs. 17, 242/- was levied by the A.O. but the said penalty was different from the penalty under section 271(1)(c) to be levied. It is also relevant to point out that there is no provision under section 271(1)(c) of the Act to impose the penalty less than the 100% of the tax sought to be evaded and in the present case this amount was at Rs. 25, 051/-. As the penalty under section 271(1)(c) of the Act leviable without taking the approval from the Joint/Additional Commissioner of Income Tax under section 271(1)(c) of the Act was not justified accordingly the same is deleted. - Decided in favour of assessee.

Summary

Issues involved:
- Imposition of penalty under Section 271(1)(c) of the Income Tax Act, 1961 without prior approval of the Additional Commissioner of Income Tax.
- Justification of penalty levied by the Assessing Officer.
- Compliance with the provisions of Section 274 of the Act regarding penalty imposition.
- Calculation and approval of penalty amount under Section 271(1)(c) of the Act.

Analysis:

Issue 1: Imposition of penalty without prior approval
The appeal was against the order of the Ld. CIT(A) upholding the penalty of Rs. 17,242 imposed by the Assessing Officer under Section 271(1)(c) of the Income Tax Act, 1961. The appellant contended that the penalty was below 100% of the tax sought to be evaded and lacked prior approval from the Additional Commissioner of Income Tax, as required by Section 274 of the Act. The appellant argued that the penalty should have been Rs. 25,051, and the Assessing Officer's failure to obtain the necessary approval rendered the penalty unjustified.

Issue 2: Justification of penalty
The Assessing Officer had levied the penalty based on additions made during assessment, including an amount of Rs. 81,072 under "Income from Other Sources." The appellant's explanations regarding non-disclosure of certain income were considered, leading to the dropping of penalty on some additions. However, the penalty on the Rs. 81,072 addition was upheld, citing inaccurate particulars of income leading to concealment. The Ld. CIT(A) sustained this penalty, prompting the appellant's appeal.

Issue 3: Compliance with Section 274 provisions
The appellant argued that since the penalty was below Rs. 20,000, the approval from the Additional Commissioner of Income Tax was not required. However, the RTI response revealed that the minimum penalty on the concealed amount should have been Rs. 25,051, necessitating the approval. The absence of such approval rendered the penalty of Rs. 17,242 unjustified under Section 271(1)(c) of the Act.

Issue 4: Calculation and approval of penalty
The RTI response clarified the calculation of the penalty amount and the requirement for approval from the Joint/Additional Commissioner of Income Tax for penalties exceeding specified limits. The penalty imposed without this approval was deemed unjustified. The tribunal, after considering the arguments and evidence, concluded that the penalty of Rs. 17,242 was not justified and deleted the same, allowing the appellant's appeal.

In conclusion, the tribunal found the penalty imposed without prior approval to be unjustified and deleted the penalty amount of Rs. 17,242, as it did not comply with the provisions of Section 274 of the Income Tax Act, 1961. The appeal of the Assessee was allowed based on these findings.