INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Leviability - Non-specification of particular charge - Very basis of levy of penalty being not correct

AO while passing assessment order in case of assessee, treated long term capital gain as unexplained cash credit under section 68 and accordingly levied penalty under section 271(1)(c) for furnishing inaccurate particulars of income and concealment of income. Further, CIT (A) confirmed such penalty as levied by the AO. Held: It was found that AO initiated penalty proceedings under both the limbs of section 271(1)(c). The penalty ultimately was levied on the assessee for furnishing inaccurate particulars of income. Thus, it could be said that the AO, failed to discharge his onus as he was not sure at the initiation of penalty under section 271(1)(c) for which specific charge of penalty should be initiated against the assessee. Even while levying the penalty also, the AO simply relied on Explanation 1 to section 271(1)(c), though he levied the penalty for inaccurate particulars of income. As apparent from the provisions of section 271(1)(c) that Explanation 1 of section 271(1)(c) is not applicable in case inaccurate particulars are furnished. Therefore, the very basis of the levy of penalty itself was not correct and hence, the penalty was deleted.

REFERRED : Smt. Divya Shailesh Bhadaliya v. ITO 33 (1) (4) [ITA No.7273/M/2018, dt. 20-2-2019] Dy. CIT, Khandwa v. M/s. Nepa Limited (2015 58 taxmann.com 137 (Indore-Trib) : 2015 TaxPub(DT) 0006 (Ind-Trib)

FAVOUR : In assessee's favour

A.Y. :

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