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No Penalty under Income Tax Act in Absence of Concealment of Income: Delhi HC upholds Order of ITAT [Read Order]

The Delhi High Court ruled that no penalty under the Income Tax Act, 1961 in the absence of concealment of Income and upheld the order of the Income Tax Appellate Tribunal (ITAT). The appellant/revenue seeks to assail the order dated 21.07.2020 passed by the Income Tax Appellate Tribunal [“Tribunal”] which was in favour of respondent-assessee, Standard Chartered  Grindlays Pty Ltd. The Tribunal set aside the penalty order passed qua the respondent/assessee.

The Assessing Officer (AO) passed a penalty order against the respondent/assessee under Section 271(1)(c) of the Income-tax Act, 1961 [“Act”] on the ground that the respondent/assessee had deliberately concealed facts and furnished inaccurate particulars concerning its taxable income.

The penalty order was confirmed by the Commissioner of Income Tax (Appeals) [“CIT(A)”]. that the trigger for the penalty was the following additions that had been made by the AO, which were, then sustained by the CIT(A). The Tribunal, however, in quantum proceedings, via order dated 30.01.2017, deleted the expenses that were disallowed under Rule 6D of the Income-tax Rules, 1962, as well as VRS expenses that had been amortized.

The AO fully allowed the deduction claimed by the respondent/assessee under Section 36(1)(viia) of the Income Tax Act, 1961. It is required to be noticed that, insofar as disallowance under Section 115(3) of the Act was concerned, the Tribunal, in quantum proceedings, in the order dated 30.01.2017, had directed the AO to recompute the same as per the formula mentioned in the order. Since the assessee had neither furnished inaccurate particulars nor did it conceal income, a penalty could not be levied on that score, the division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia agreed with the view of the Tribunal. As there is no substantial question of law arises for our consideration, the court closed the appeal.

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