Case Law Details
P.V. Ramana Reddy Vs. ITO (ITAT Hyderabad)- Assessing Officer is vested with a discretionary power to levy or not to levy any penalty in a deserving case. In the case of Hindustan Steel Ltd Vs. State of Orissa (83 ITR 26) (SC), held that penalty should not be imposed merely because it is lawful to do so. The Assessing Officer has to exercise his discretion judiciously. If an assessee files the revised return though at a later stage or disclosed true income, penalty need not be levied. No doubt, merely offering additional income will not automatically protect the assessee from levy of penalty but in a given case where the assessee’s case, came forward with additional income though after deduction on account of that the assessee was not in a position to explain properly, the seized material and express remorse, in his conduct un-hesitantly, the Assessing Officer might have to exercise the discretion in favor of such assessee as otherwise the expression ‘may’ in section 271(1)(c) of the Act remains redundant. If it is to be understood that in a case of admitted concealment penalty is not automatic. The discretion vested in the officer should be used not to levy the penalty. In our opinion, the case before us is most befitting case to exercise such discretion, particularly there is divergent of opinion among the lower authorities as well as the Tribunal while deleting or sustaining the addition. It shows that there is no conclusive proof that the assessee concealed income or furnished inaccurate particulars of income. Further as seen from the facts of the case, to avoid litigation the assessee accepted the additions or made fresh offer in the course of the proceedings before the lower authorities. After the Assessing Officer had the clinching evidence of concealment then the offer may not have been accepted and the same should have been proceeded on the basis of material available on record. The lower authorities relied on proceedings before assessing officer for levying the penalty. The same do not constitute admission for the purpose of levying penalty. The addition made on the basis of more or less on the offer made by the assessee and the Assessing Officer not brought enough incriminating material for concealment and there is no material for establishing the concealment independently in the given facts and circumstances of the penalty is not leviable and the same is deleted.
INCOME TAX APPELLATE TRIBUNAL, HYDERABAD
I.T.A. No. 1852/Hyd/2011 : A.Y. 1999- 00
I.T.A. No. 1853/Hyd/2011 : A.Y. 2000-01
I.T.A. No. 1854/Hyd/2011 : A.Y. 2001-02
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very nicely analaysied the provisions of penalty leviable u/s.271(1)(c) of the IT Act by the Hon’ble Tribunal. The approach of the department that in case of every acceptance for addition autotmatically leads concealement of income or amounts furnishing of inaccurate particulars of income is an erroneous view. Huge penalty when levied, more discretion and judicious approach is needed. Though I do not mean that there should not levy of penalty at all u/s. 271(1)(c) of the Act, when the burden to prove is a negative fact , more discretion in favour of the assesee needs to be exercised and the decision of the Hon’ble Apex court in Hindusthan Steels requires to be appplied. A very reasonsed order of the Tribunal explaining legal position.