No Penalty if no inaccurate Reporting and no Concealment by Assessee

CIT Vs Standard Chartered Grindlays Pty Ltd (Delhi High Court)

Introduction: The recent decision by the Delhi High Court in the case of CIT vs. Standard Chartered Grindlays Pty Ltd involves the condonation of delay and an appeal against the Income Tax Appellate Tribunal’s (ITAT) order dated 21.07.2020. The key contention is the imposition of a penalty under Section 271(1)(c) of the Income-tax Act, 1961, by the Assessing Officer (AO).

1. Delay Condonation:

• The appellant/revenue sought condonation of a delay of 400 days in re-filing the appeal.
• Despite the delay, the court decided to consider the appeal on its merits, and the delay was condoned.

2. Background and Penalties:

• The appeal pertains to Assessment Year 1997-98, challenging the ITAT order that set aside the penalty imposed on the respondent/assessee.
• The AO had levied a penalty under Section 271(1)(c) alleging deliberate concealment of facts and furnishing inaccurate particulars.

3. Quantum Proceedings and Additions:

• The AO’s penalty was based on additions, including disallowed training expenses, disallowance of provision under Section 36(1)(via), disallowance under Section 115(3), and VRS expenses.
• The Tribunal, in quantum proceedings, deleted three out of four additions, affirming the deduction under Section 36(1)(viia) and rejecting the disallowance under Section 115(3).

4. ITAT’s Rationale for No Penalty: