Case Number: ITA 5425/DEL/2019
Appellant: Vrindavan Tubes Ltd., Meerut
Respondent: ACIT, Circle-26(2), New Delhi
Assessment Year: 2015-16
Case Filed On: 2019-06-17
Order Type: Final Tribunal Order
Date of Order: 2022-08-31
Pronounced On: 2022-08-31
The case concerns the penalty imposed on Vrindavan Tubes Ltd for the assessment year 2015-16. The penalty was upheld by the Commissioner of Income-Tax (Appeals)-9, New Delhi, under Section 271(1)(c) of the Income-Tax Act, 1961, which pertains to the concealment of income or furnishing inaccurate particulars of income.
Vrindavan Tubes Ltd initially filed its Income Tax Return (ITR) on 23-09-2015, declaring a total loss of Rs. 247,54,141. The case was selected for scrutiny, and a notice under Section 143(2) was issued on 28.09.2016. Subsequently, the assessee revised its ITR on 01-10-2016, declaring a reduced loss of Rs. 52,46,647 after disallowing Rs. 1,95,07,494 under Section 43B of the Act.
The Assessing Officer (AO) initiated penalty proceedings on the basis that the revised ITR was filed only after the scrutiny notice was served. The AO imposed a penalty of Rs. 77,47,664, stating that the assessee had furnished inaccurate particulars of income. This penalty was upheld by the CIT(A), prompting the assessee to appeal to the Tribunal.
The assessee raised two primary grounds in its appeal:
The Tribunal analyzed the facts and the legal precedents applicable to the case. The key issue was whether the penalty under Section 271(1)(c) could be levied when the assessee had voluntarily revised its return within the allowable time period under the IT Act.
The Tribunal referred to several judgements, including the Supreme Court’s decisions in Hindustan Steel Ltd. vs. State of Orissa and CIT vs. Reliance Petroproducts, which held that a claim that is not accepted by the AO does not automatically lead to a penalty for furnishing inaccurate particulars of income.
The Tribunal noted that the AO had not made any addition or disallowance related to the interest amounting to Rs. 1,95,07,494 claimed under Section 43B in the revised return. The revised return was filed before the completion of the assessment, and the AO’s observation indicated uncertainty about whether the assessee had concealed particulars of income or furnished inaccurate particulars.
Additionally, the Tribunal pointed out that the CIT(A) had partly deleted the penalty related to other disallowances, further indicating that the penalty imposition was not straightforward.
After considering the submissions and the facts of the case, the Tribunal concluded that the penalty imposed under Section 271(1)(c) was not sustainable. The Tribunal found that the revised return was filed voluntarily and within the allowable period, and the AO had not established that the original return was filed with an intention to conceal income or furnish inaccurate particulars.
The Tribunal held that imposing a penalty for a claim that was subsequently revised and corrected by the assessee would be contrary to the principles laid down by the Supreme Court in the case of Reliance Petroproducts. Furthermore, disallowance under Section 43B did not amount to concealment of income as per the Madras High Court’s judgement in CIT vs. MSK Construction (P) Ltd.
The Tribunal quashed the penalty imposed by the AO and upheld by the CIT(A), directing the deletion of the penalty. The Tribunal’s decision reinforces the importance of procedural fairness and the correct application of penalty provisions under the Income-Tax Act.
This case serves as a significant reminder that voluntary revisions of returns, when done within the permissible time, should not be penalized unless there is clear evidence of intent to deceive. It underscores the necessity for tax authorities to distinguish between genuine errors and deliberate concealment while levying penalties.
The Tribunal’s detailed analysis and adherence to judicial precedents provide valuable insights into handling similar cases, ensuring that justice and fairness are upheld in tax litigation.
The judgement is a critical reference for both taxpayers and tax practitioners, highlighting the need for precise and clear communication in penalty notices and the importance of timely and accurate compliance with tax laws.
Vrindavan Tubes Ltd vs ACIT: Penalty Dispute Over Revised Return for Assessment Year 2015-16
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