2025 (7) TMI 306 - AT - Income Tax

Penalty u/s 271(1)(c) - whether assessee has concealed particulars of his income and furnished incorrect particulars of income? - Expenses claimed on strength of audit report by CA - HELD THAT - It is crystal clear that penalty order under Section 271(1)(c) of the Act is in pursuance to assessment order 2024 (5) TMI 1589 - ITAT DELHI wherein deleted all the additions made in assessment order. Moreover penalty cannot be imposed as expenses were claimed on strength of audit report by CA as per ratio of judgment in CIT vs. Reliance Petro products s case 2010 (3) TMI 80 - SUPREME COURT . Therefore the penalty order being unsustainable in the eyes of law is set aside. Appeal of appellant/assessee is allowed.

Summary

The Appellate Tribunal (ITAT Delhi) allowed the assessee's appeal against the penalty order dated 31.03.2022 imposed under Section 271(1)(c) of the Income Tax Act, 1961, arising from the assessment order dated 30.12.2017 for AY 2015-16. The penalty was confirmed by the Commissioner of Income Tax (Appeals) (CIT(A)) on 15.07.2024, alleging concealment and furnishing of incorrect particulars of income.Key legal reasoning includes:- The ITAT noted that all additions made in the assessment order under Section 143(3) dated 30.12.2017 were deleted by the Tribunal itself in related appeals (ITA Nos. 4700/Del/2019, 1338/Del/2022 and CO No. 81/Del/2019) by order dated 31.05.2024.- The Tribunal relied on the Supreme Court's ruling in *CIT vs. Reliance Petroproducts (P) Ltd.* (2010) 322 ITR 158 (SC), holding that penalty under Section 271(1)(c) cannot be sustained where expenses are claimed on the strength of an audit report by a Chartered Accountant.- Since the penalty order was "in pursuance to assessment order" which was set aside, and the expenses were supported by a CA audit report, the penalty order was held "unsustainable in the eyes of law" and was set aside.The appeal was allowed, and the penalty order quashed. The decision emphasizes that penalty under Section 271(1)(c) cannot be imposed where the additions are deleted and expenses are supported by a CA audit report, consistent with the Supreme Court precedent.