INCOME TAX ACT, 1961

Section 271(1)(b)

Penalty under section 271(1)(b) - Addition under section 68 - AO failed to make out a case for levy of penalty under section 271(1)(c) -

AO passed assessment order under section 147 assessing the assessee's income and an amount was excluded from the head “PGBP” and the same amount was added under section 68. AO also levied penalty under section 271(1)(c) holding that assessee had furnished inaccurate particulars of income. Held: AO as well as CIT(A) have failed to make out a case for levy of penalty under section 271(1)(c) because they have been unable to show, when assessed income is same as returned income. And if so, how allegation of furnishing of inaccurate particulars of income can be said to have resulted in tax sought to be evaded by assessee. That there was some tax sought to be evaded by assessee, is a necessary condition for imposition of penalty under section 271(1)(c). Allegation of CIT(A) that assessee had bogus income or bogus credit, was pointless, because corresponding amount was already included in the returned income of assessee. Therefore, penalty deserved to be deleted.

Followed:<./i>CIT v. Zoom Communication Pvt. Ltd. (2010) 327 ITR 510 (Del-HC) : 2010 TaxPub(DT) 1957 (Del-HC), CIT v. Indian Metals And Ferro Alloys Limited (1994) 117 CTR (Ori.-HC) 378 : 1995 TaxPub(DT) 207 (Ori-HC), CIT v. Drapco Electric Corporation (1980) 122 ITR 341 (Guj-HC) : 1980 TaxPub(DT) 378 (Guj-HC) and Addl. CIT v. BN. Bhagi & Brothers (1977) 106 ITR 359 (All-HC) : 1977 TaxPub(DT) 302 (All-HC).