(PER : HONOURABLE MS JUSTICE SONIA GOKANI)
1. Challenging the order of the Tribunal dated 22.5.2012, Revenue has preferred this appeal proposing following questions of law for our consideration:-
(i) Whether in the circumstances and the facts of the case and in law, the Appellate Tribunal was correct in deleting the penalty u/s. 271(1)(c) of the Act even though correct facts were not disclosed in the return of income filed by the assessee?
(ii) Whether in the circumstances and the facts of the case and in law, the Appellate Tribunal was right in holding that since the ITAT fully agrees with the First Appellate Authority, reasons need not be given?
Heard learned advocate Mr. Pranav Desai for the Revenue and with his assistance examined the papers.
For the sake of convenience both the questions are being answered together. Question raised is with regard to the amount of penalty deleted by the Appellate Tribunal by a detailed discussion. It is contended by the learned counsel that certain material particulars since were not appropriately put forward before the Assessing Officer that should amount to the respondent assessee not having fulfilled its obligations giving rise to penalty proceedings and Tribunal erred in holding penalty levied by the Assessing Officer.
4. As can be noted from the record, the assessee respondent in return of income, declared his total income at Rs.13,35,470/- for the assessment year 2005-06. Assessing Officer made certain additions and disallowances in scrutiny assessment under Section 143(3) of the Income Tax Act and eventually initiated penalty proceedings under Section 271(1)(c) of the Income Tax Act.
5. When challenged before CIT(Appeals), certain additions and disallowances had been deleted. It would be worthwhile to reproduce those additions/ disallowance vide order dated 13.8.2008:-
(i) Addition u/s.40a(ia) for non-deduction and payment of tax deducted at source of Rs.1,41,82,162/- is reduced to Rs.1,04,59,113/- by CIT(A).
(ii) Disallowance of depreciation of Rs.47,331/- on factory shed, plant & machinery & TV is deleted.
(iii) Disallowed depreciation on cars and vehicles Rs.2,54,836/- which is restricted to Rs.50,967/- by CIT(A).
(iv) Disallowance of depreciation on Guest House of Rs.85,604/- is reduced to Rs.17,120/-.
6. CIT(Appeals), on the ground of penalty, concluded that there was no material to indicate any concealment or furnishing of inaccurate particulars by the assessee. Therefore, it deleted the penalty imposed by the Assessing Officer. When challenged before the Tribunal, it concurred with the findings of CIT(Appeals) and upheld such findings and held thus:-
8. Having heard both sides, we have carefully gone through the order of authorities below. It is well settled law that penalty u/s. 271(1)(c) is not automatic. For levying penalty u/s.271(1)(c), non bona fide conduct of the assessee should be apparent from the facts and circumstances and it should not be digged out by applying story of probabilities and assumptions. In this case, the explanation of the assessee is not found false or non bona fide. Therefore, we are of the view that ld.CIT(A) rightly cancelled the penalty levied u/s. 271(1)(c) of the I.T. Act. We therefore, upheld the order of ld.CIT(A).
7. Tribunal also discussed at length the decision of the Apex Court rendered in the case of C. I. T., Ahmedabad v. Reliance Petroproducts Pvt. Ltd. reported in (2010) 322 ITR 158(SC).
8. We are in agreement with the findings and conclusions of both CIT(Appeals) and Tribunal as is apparent from the record. The assessee respondent, in its return of income, had disclosed all details and material particulars, which it was expected to do so under the law. It is a different aspect that Assessing Officer made certain additions in the scrutiny assessment. However later on, CIT(Appeals) had treated it differently by allowing and deleting certain additions. That itself cannot give rise to the penalty proceedings. Both having appropriately applied the law to the facts of the instant case, this Tax Appeal merits no further consideration and the same is dismissed.
(AKIL KURESHI, J.) (MS SONIA GOKANI, J.) SUDHIR Page 3 of 3