|DATE:||(Date of pronouncement)|
|DATE:||April 17, 2011 (Date of publication)|
|Click here to download the judgement (nayan_builders_penalty_271_1_c.pdf)|
Mere admission of Appeal by High Court sufficient to disbar s. 271(1)(c) penalty
In quantum proceedings, the Tribunal upheld the addition of three items of income. The assessee filed an appeal to the High Court which was admitted. The AO levied penalty u/s 271(1)(c) in respect of the said three items. The penalty was upheld by the CIT (A). On appeal to the Tribunal, HELD allowing the appeal:
When the High Court admits substantial question of law on an addition, it becomes apparent that the addition is certainly debatable. In such circumstances penalty cannot be levied u/s 271(1) (c). The admission of substantial question of law by the High Court lends credence to the bona fides of the assessee in claiming deduction. Once it turns out that the claim of the assessee could have been considered for deduction as per a person properly instructed in law and is not completely debarred at all, the mere fact of confirmation of disallowance would not per se lead to the imposition of penalty.