Income Tax Act, 1961

--Penalty under section 271(1)(c)Concealment Deduction claimed disallowed--Assessee company had claimed deduction of employee's training expenses paid on account of staff account. Assessing officer disallowed assessee's claim as it had claimed wrong deduction on account of training expenses as well as on account of salary of managing disactor's son and there by furnished inaccurate particulars of income causing loss to the Revenue. Therefore, show-cause notice was issued for levying of penalty under section 271(1)(c). Assessing officer rejecting the contention of assessee for bona-fide claim had imposed a penalty for willfully concealing the income. Assessee challenged the action of assessing officer on the ground that assessing officer who issued show cause notice for furnishing of inaccurate particulars of income had imposed penalty on account of concealment of particulars of income. And the action of Commissioner (Appeals) to confirm the addition on the basis that the quantum appeal the expenditure was held to be personal expenditure. Held: Was justified as section 271(1)(c) mandates two different and separate defaults i.e., concealment of particulars of income and furnishing of inaccurate particulars of income and if one of them or both of them are found to exist, penalty can be imposed under this section. But the assessing officer has to clearly show-cause the assessee as to which of the two defaults or both defaults have been committed by the assessee. Only when the assessee is clearly put to that defence, penalty can be imposed, if the explanation of the assessee is not found satisfactory, on that very reason. It cannot be done vice versa. As regarding quantum proceedings if was concluded that the confirmation of any addition of quantum will not lead to the levy of penalty automatically. The quantum proceedings and the penalty proceedings operate in different spheres and different parameters apply thereto. Hence, it cannot be said that the assessee has blatantly made wrong claims with a mala fide intention. Thus, neither the assessee-company has concealed particulars of income nor it has furnished inaccurate particulars of its income accordingly, no penalty under section 271(1)(c) was leviable.

Income Tax Act, 1961 Section 271(1)(c)

In the ITAT, Jodhpur Bench

Hari Om Maratha, J.M. & N. K. Saini, A.M.