ITAT Dehradun Quashes Penalty Based on Principle of Consistency: DCIT vs State Infrastructure & Industrial Development Corporation

The Income Tax Appellate Tribunal (ITAT), Dehradun Bench, recently delivered a notable ruling reinforcing the judicial principle of consistency in tax proceedings. In the case of DCIT Vs State Infrastructure & Industrial Development Corporation of Uttarakhand Ltd., the Tribunal dismissed the appeal filed by the Revenue, thereby upholding the deletion of a substantial penalty previously levied under Section 271(1)(c) of the Income Tax Act, 1961.

The core of the dispute revolved around whether a penalty for furnishing inaccurate particulars of income could be sustained when the assessee had voluntarily withdrawn an inadvertent claim, especially when appellate authorities had already deleted similar penalties for the assessee in previous assessment years under identical circumstances.

Background of the Dispute

The matter pertains to the Assessment Year 2014-15. The initial assessment was finalized by the Assessing Officer (AO) via an order dated 19.12.2016, executed under Section 143(3) of the Income Tax Act, 1961.

During the assessment proceedings, it was observed that the assessee had made an excess claim for deduction under Section 80IA. Upon realizing the inadvertent error, the assessee suo motu withdrew the excess claim. Despite this voluntary corrective action, the AO proceeded to initiate penalty proceedings, alleging that the assessee had furnished inaccurate particulars of income.