The Tax Publishers2021 TaxPub(DT) 0434 (Del-Trib)

INCOME TAX ACT, 1961

Section 271(1)(c)

Where AO has to record satisfaction while levying penalty for concealment and thereafter come to a finding in respect of one of the limbs, which is specified under section 271(1)(c) and for imposition of penalty under section 271(1)(c) either concealment of particulars of income or furnishing inaccurate particulars of such income are sine qua non, therefore, penalty cannot be imposed for alleged breach of one limb of section 271(1)(c) while penalty proceedings are initiated for breach of other limb of the section.

Penalty under section 271(1)(c) - Recording of satisfaction, whether mandatory - Disallowance under section 14A -

Assessee was engaged in business of real estate. The case was selected for scrutiny and thereafter assessment was framed under section 143(3) and the total loss was determined inter alia by making the disallowance under section 14A read with rule 8D. On the said disallowance under section 14A, AO levied the penalty under section 271(1)(c). Held: While levying penalty for concealment, AO has to record satisfaction and thereafter come to a finding in respect of one of the limbs, which is specified under section 271(1)(c). The first step is to record satisfaction while completing the assessment as to whether the assessee had concealed its income or furnished inaccurate particulars of income. Thereafter, notice under section 274 read with Section 271(1)(c) is to be issued to the assessee. For the imposition of penalty under section 271(1)(c) either concealment of particulars of income or furnishing inaccurate particulars of such income are sine qua non. Therefore, penalty cannot be imposed for alleged breach of one limb of section 271(1)(c) while penalty proceedings are initiated for breach of other limb of the section.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2012-13



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