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Judgment
PER AMITABH SHUKLA, AM,
The captioned appeal has been preferred by the assessee against order dated 08.10.2025 of the Commissioner of Income Tax (Appeals)/ National Faceless Appeal Centre, New Delhi,[hereinafter referred to as ‘ld. CIT(A)’] arising out of assessment order dated 27.06.2019 passed u/s 271(1)(c) of the Income Tax Act, 1961 pertaining to Assessment Year 2016-17. The word ‘Act’ herein this order would mean Income Tax Act, 1961.
The assessee has raised following grounds of appeal:-
1.That the Ld. Assessing Officer (herein after referred as Ld. AO') has erred in law and on the fact of the case by imposing the penalty under section 271(1)(c) of the Act and thereby, raising a demand of Rs. 92,267/- and Ld. CIT(A) has erred while upholding the same.
2.That the Ld. AO has erred while imposing the penalty u/s 271(1)(c) of the Act on account of furnishing of inaccurate particulars without there being any addition in the course of assessment proceeding and the order of Ld. CIT(A) suffers from fundamental fallacy while upholding the finding of Assessing Officer.
3.The Ld. AO has erred in law and on facts by imposing the penalty on difference of presentation of figures by the assessee in the Income Tax Return and Tax Audit Report as the penalty has been imposed on difference of opinion between the Ld. AO and the appellant on presentation of figures and hence, in such case the penalty cannot be levied for the concealment of income or furnishing the inaccurate particulars of income and Ld. CIT(A) has also erred while upholding the same.
4.That the Ld. AO as well as Ld. CIT(A) has erred while returning the findings of furnishing of inaccurate particulars as it is contrary to the settled principle that disclosure in tax audit report constitutes full disclosure of material facts.
5.That the Ld. AO has erred in law as the penalty cannot be imposed when the statutory requirement of "concealment" or "inaccurate particulars" is not established with regard to material elements that affect the taxable income and Ld. CIT(A) has erred while upholding the finding of Assessing Officer.
6.That the Ld. CIT(A) has also erred while applying section 28, explanation 2 of the Act to uphold the finding of Ld. AO which is overly technical and not consistent with the legislative intent.
The only issue seminal to the present appeal is regarding the imposition of penalty u/s 271(1)(c) of the Act. The ld. Counsel for the assessee submitted that the penalty imposed upon the assessee of Rs.92,267/-is totally untenable. It was submitted that no addition has been made in the assessment order. The ld. Counsel of the assessee has argued that the Return of Income of Rs.2,60,700/- was accepted vide order under section 143(3) dated 21.12.2018. It was argued that in absence of any concealed income indicated in the order, no case of imposition of penalty under section 271(1)(c) was made out. It was accordingly requested that penalty order be quashed.
The ld. Sr. DR, Ms. Harpreet Kaur Hansra, argued that penalty has been imposed for submitting inaccurate particulars of income. The ld. Sr. DR submitted that the AO had noted discrepancies in the figures given in the Return of Income vis a vis tax audit report.
We have heard the rival submissions in the light of material available on record. Section 271(1)(c) of the Act refers to imposition of penalty for concealment or submitting inaccurate particulars of income, a penalty of Rs.100% to 300% of the amount of tax sought to be evaded through its act of concealment of income or submitting inaccurate particulars of income. The basic point is that there should be an element of tax sought to be evaded. In the instant case, we have noted that the component of tax sought to be evaded is totally missing in this case. Consequently, there cannot be any question of imposition of any penalty under section 271(1)(c) of the Act. Accordingly, we delete the penalty of Rs.92,267/- under section 271(1)(c) of the Act. Accordingly, the appeal of the assessee is allowed.
In the result, the appeal of the assessee is allowed.