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Commissioner of Income Tax And Others Versus M/s. Ankita Electronics Pvt Ltd.

2015 (3) TMI 1029 - KARNATAKA HIGH COURT

Penalty imposed under Section 271(1)(c) - Tribunal dismissed the appeal of the Revenue and the penalty imposed under Section 271(1)(c) has been disallowed - Held that:- Additions in respect of which penalty under Section 271(1)(c) of the Act was levied, have been admitted by the High Court for consideration and thus found that the additions made were debatable and would lead credence to the bonafides of the assessee. It thus held that the matter of imposing penalty under Section 271(1)(c) of the .....

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ssee has been rejected by the revenue authorities would not make the assessee liable for penalty. The Apex Court in Reliance Petroproducts ( 2010 (3) TMI 80 - SUPREME COURT ) also held that "merely because the assessee had claimed the expenditure, which claim was not acceptable to the revenue, that by itself would not, in our opinion, attract the penalty under Section 271(1)(c). If we accept the contention of the Revenue then in case of every return where the claim made is not accepted by AO for .....

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d the appeal filed by the assessee against the assessment proceedings has been admitted by the High Court on the substantial question of law, still penalty can be imposed under Section 271(1)(c) of the Income Tax Act ? 2. This appeal has been filed by the Revenue challenging the order of the Tribunal, which has dismissed the appeal of the Revenue and the penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as the Act for brevity) has been disallowed. 3. Br .....

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/-). The disallowance was confirmed on merits by the Commissioner of Income Tax (Appeals). The appeal of the assessee before the Tribunal was also dismissed. The assessee then filed an appeal before the High Court, which has been admitted on 04.06.2012 (being ITA No.282/2011) on the following substantial questions of law: (A) Whether on the facts and circumstances of the case, the Hon ble Tribunal was right in law in upholding the action of the Learned Respondent under section 147 when the manda .....

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cumstances of the case, the Hon ble Tribunal was right in law in upholding the disallowance of ₹ 60,000 in respect of remuneration paid to directors of the appellant Company by invoking section 40A(2) of the IT Act? (D) Whether on the facts and in the circumstances of the case, the Hon ble Tribunal was right in law in upholding the disallowance of ₹ 66,000 in respect of salary paid to Ms.Namratha G Patel? (E) Whether on the facts and in the circumstances of the case, the Hon ble Trib .....

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g Authority initiated penalty proceedings on 27.11.2006 against the respondent-assessee under Section 271(1)(c) of the Act. Vide order dated 25.10.2011 penalty of ₹ 13,42,000/- was levied for concealment of income. The appeal filed by the assessee challenging the order of penalty was allowed by the Commissioner of Income Tax (Appeals). Challenging the said order, the Revenue filed an appeal before the ITAT which has also been dismissed by order dated 14.02.2014. Aggrieved by the said order .....

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law in relying on the Mumbai Tribunal order in the case of Nayan Builders & Developers P.Ltd. in ITA No.2379/Mumbai/2009 dated 18.03.2011without appreciating that the facts of the relied upon case are different and distinct from that of the present case? 5. We have heard Sri K.V.Aravind, learned Counsel appearing for the appellants at length and appreciate the fairness with which he has presented the case and placed before us various decisions on the questions at hand. 6. While dismissing th .....

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ayan Builders & Developers Pvt. Ltd., which had also held that "the admission of substantial questions of law by the High Court lends credence to the bona fides of the assessee in claiming deduction. Once it turns out that the claim of the assessee could have been considered for deduction as per a person properly instructed in law and is not completely debarred at all, the mere fact of confirmation of disallowance would not per se lead to the imposition of penalty." 8. The assessee .....

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l questions of law which have been reproduced hereinabove. 9. The mere admission of the appeal by the High Court on the substantial questions of law as have been quoted above, would make it apparent that the additions made were debatable. The Tribunal has thus rightly held that the admission of substantial questions of law by the High Court leads credence to the bona fide of the assessee and therefore, the penalty is not exigible under Section 271(1)(c) of the Act. Merely because the claim of th .....

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ere provided by the assessee in its return, and as such, on such ground the penalty proceedings have rightly been initiated. 12. The information supplied by the assessee in its return cannot be said to be concealment of any information. The facts that are borne out in this case are that the assessee had provided certain particulars with regard to payment of salary and loans which had been taken by the Company from certain individuals. The questions as to whether the benefit of the payment of sal .....

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f income or furnishing inaccurate particulars of such income. The extract of the relevant provisions of Section 271(1)(c) of the Act is reproduced below: "271(1) If the Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner in the course of any proceedings under this Act, is satisfied that any person- (a) xxxxxx (b) xxxxxx (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, or (d) xxxxxx he may direct tha .....

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