Trans Global Holdings vs ITO: Appeal on Penalty under Section 271(1)(c) for AY 2012-13

Trans Global Holdings vs ITO: Appeal on Penalty under Section 271(1)(c) for AY 2012-13

Case Number: ITA 5757/DEL/2019

Appellant: Trans Global Holdings (P) Ltd., New Delhi

Respondent: ITO, Ward-25(3), New Delhi

Assessment Year: 2012-13

Case Filed on: 2019-07-01

Order Type: Final Tribunal Order

Date of Order: 2022-09-07

Pronounced on: 2022-09-07

Introduction

Trans Global Holdings (P) Ltd. appealed against the penalty levied under Section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2012-13. The case was heard by the Income Tax Appellate Tribunal (ITAT) Delhi Bench ‘H’ on 5th September 2022 and the order was pronounced on 7th September 2022.

Background

The penalty was imposed on the appellant by the Assessing Officer (AO) based on the difference in the closing value of stock of shares as per market value and as per the inventory. The AO noted that the assessee had furnished inaccurate particulars of its income or loss, leading to the computation of additional tax liabilities.

Grounds of Appeal

The main grounds of appeal were:

• The penalty levied was solely based on the difference in valuation between the book value and market value of the stock of shares.
• The appellant argued that this difference did not constitute the furnishing of inaccurate particulars of income deliberately.

Tribunal Proceedings

During the hearing, none appeared on behalf of the assessee. The Revenue was represented by Shri M. Baranwal, CIT DR. The Tribunal took into account the facts presented in the appeal and the arguments made by the Revenue.

Findings and Conclusion

The Tribunal, comprising Shri C. N. Prasad, Judicial Member, and Dr. B. R. R. Kumar, Accountant Member, noted that the penalty under Section 271(1)(c) was levied only due to the difference in valuation of stock. The discrepancy was between the book value and the market value.

The Tribunal held that such a difference in valuation did not constitute a deliberate act of furnishing inaccurate particulars of income. It emphasized that the penalty provisions are not meant to be invoked in cases where there is no deliberate furnishing of inaccurate particulars by the assessee.

Final Judgment

The ITAT Delhi concluded that the penalty levied under Section 271(1)(c) was not justified in this case. The Tribunal directed the obliteration of the penalty.

Order

In the result, the penalty levied is obliterated.

Order pronounced in the open court on 7th September 2022.

Sd/-
(C. N. Prasad)
Judicial Member

Sd/-
(Dr. B. R. R. Kumar)
Accountant Member

Dated: 07/09/2022

Copy Forwarded to:

1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR: ITAT

Assistant Registrar, ITAT, New Delhi

Trans Global Holdings vs ITO: Appeal on Penalty under Section 271(1)(c) for AY 2012-13