| The Tax Publishers2021 TaxPub(DT) 5812 (Mum-Trib) INCOME TAX ACT, 1961
Section 271(1)(c)
Where substantial question of law raised by assessee on addition under section 68 was admitted by jurisdictional High Court; the issue in dispute became debatable and hence, there could not be any penalty for alleged furnishing of inaccurate particulars of income and accordingly, the penalty levied under section 271(1)(c) was liable to be deleted.
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Penalty under section 271(1)(c) - Leviability - Alleged furnishing of inaccurate particulars of income - Substantial question of law admitted by Jurisdictional High Court
AO observed that assessee received sale proceeds of shares. Since there was an huge appreciation in price of scrip within a span of 16 months, the AO conducted enquiries and observed that the scrip treated by the assessee had been categorized as 'penny stock' and that the assessee's broker had been involved in manipulation of share prices. Thus, the AO made addition on account of unexplained cash credit under section 68 representing the sale proceeds of the shares, which was upheld by CIT(A). Subsequently, the AO levied penalty under section 271(1)(c) on the ground that the assessee furnished inaccurate particulars of income. On appeal, CIT(A) on the basis of quantum appeal being confirmed by Tribunal, upheld the levy of the penalty under section 271(1)(c). Held: Against dismissal of assessee's appeal against addition under section 68 by Tribunal in quantum appellate proceedings, the assessee preferred an appeal before Jurisdictional High Court and the same had been admitted. Once the question of law has been admitted by the High Court, there cannot be any allegation that can be levied on the assessee for furnishing inaccurate particulars of income thereon as the issue becomes debatable. In instant case, the assessee indeed furnished all relevant documents that were necessary for factual adjudication of the issue in dispute. It was only question of non-acceptance of the said evidence by AO due to astronomical increase in share price of scrip dealt by the assessee, which eventually led to addition. The substantial question of law raised by the assessee on such addition had been admitted by the Jurisdictional High Court and, thus, the issue in dispute became debatable. Hence, there could not be any penalty for alleged furnishing of inaccurate particulars of income and accordingly, the penalty levied under section 271(1)(c) was deleted.
Relied:Pr. CIT (Central) - 2 v. Harsh International (P) Ltd. [ITA No. 620/2019, dated 22-12-2020] : 2021 TaxPub(DT) 68 (Del-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2006-07
IN THE ITAT, MUMBAI BENCH
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