Case Law Details
Brief of the Case
In, the present facts of the Case the Hon’ble High Court held that no penalty could be levied until it is proved that there was an active concealment or there is deliberate furnishing of inaccurate particulars.
Facts of the Case
In, the present facts of the Case the Revenue have challenged the order of ITAT u/s 260A. The assessee in its accounts had shown borrowed funds and interest free advances to its sister concern. The A.O. disallowed the proportionate interest out of the interest paid for the interest free advances. The CIT(A) upheld the orders of AO. Then on the appeal, ITAT remanded the matter, where AO again disallowed the proportionate interest and levied penalty as well by holding that the Assessee have furnished inaccurate particulars.
Held by CIT(A)
The ld. CIT(A) held that the penalty could not be levied unless it is shown that the assessee was having any malafide intention.
Held by ITAT
The Hon’ble ITAT relied on the Judgment of CIT v Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158 (SC) and held that since the assessee is having no mala fide intention, therefore there is no question of any penalty.
Contention of the Revenue
The ld. counsel for the Revenue contended that Assessee had concealed its income and had misrepresented the facts as explanations were not furnished. It was further submitted that the decision of the Apex Court has not laid down an absolute proposition as held by the Tribunal and if such interpretation is accepted there will be virtually no case where a penalty can be levied. He submitted that in the case of Reliance Petroproducts (supra), the Assessee gave explanation, which is not the present case. The ld. Counsel relied on the Judgement of Delhi High Court in the case of Commissioner of Income Tax Vs Zoom Communication P. Ltd. [2010] 327 ITR 510 (Delhi), where the order of Tribunal was reversed by deleting the penalty relying on the decision of the Apex Court in Reliance Petroproducts(supra).
Contention of the Assesssee
The ld. Counsel for the Assessee submitted that no notice was issued to the Assessee before imposing the penalty and both the Assessee and it’s sister concerns, were loss making unit. The Assessee felt that the Assessee was covered by the decision of the Apex Court in the case of S.A Developers v. CIT(A) 2007 (288) ITR 1. Section 271(1)(c) of the Act lays down that the penalty can be imposed if the authority is satisfied that any person has concealed particulars of his income or furnished inaccurate particulars of such income. In the present case both the ingredients were not present.
Held by the High Court
The Assessee had given interest free advances to it’s sister concerns and that it was disallowed by the Assessing Officer, the Assessee had challenged the same by instituting the proceedings which were taken up to the Tribunal. The Tribunal had set aside the order of the Assessing Officer and restored the same back to the Assessing Officer. Therefore, the interpretation placed by Assessee on the provisions of law, while taking the actions in question, cannot be considered to be dishonest, malafide and amounting concealment of facts. Even the Assessing Officer in the order imposing penalty has noted that commercial expediency was not proved beyond doubt. The Assessing Officer while imposing penalty has not rendered a conclusive finding that there was an active concealment or deliberate furnishing of inaccurate particulars. These parameters had to be fulfilled before imposing penalty on the Assessee. Accordingly, the decision was in the favour of the assessee.
