Penalty under sec 271(1)( C ) not impossible on debatable issues

Last updated: 17 July 2012

Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
In appellate proceedings, Ld. CIT(A) allowed the assessee’s claim that the interest income of ` 13,17,241/- was not to be taxed as income from other sources. However, ITAT vide its order in ITA No. 1378/Del/2005 dated 25.3.2008 reversed the order of the Ld. CIT(A) and upheld the AO’s view that interest of ` 13,17,241/- earned from fixed deposits is liable to be assessed as income from other sources. Subsequent to the receipt of the ITAT order, the AO has imposed the penalty u/s. 271(1)(c) holding that the assessee had concealed its income to the extent of ` 13,17,241/- by setting off the interest income against expenses in the work in progress account debited to the profit and loss account. He accordingly, imposed a penalty @ 100% of the tax sought to be evaded at ` 5,20,969/-.

Citation :
Income Tax Officer, Ward 11(1), Room No. 321, C.R. Building, IP Estate, New Delhi – 110 002 (Appellant) Vs. M/s Energetic Constructions Pvt. Ltd. 203, Okhla Industrial Area, Phase-III, New Delhi – 110 020 (PAN: AAACE 2614 H) (Respondent)