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CIT's power to levy concealment penalty u/s.271(1)(c) of the I.T.Act

(Querist) 26 January 2011 This query is : Resolved 
Whether the CIT can initiate and levy penalty u/s.271(1)(c) of the Act at the time of concluding the revisionary proceedings u/s.263 of the Act. Whether such action is valid or it is only the assessing officer should levy such penalty? What is the implication of the judgement of the Reliance Petro Products decision of the Supreme Court in this regard?
B.Chakrapani Warrier (Expert) 27 January 2011
The CIT can levy penalty w.e.f 1-6-2002 by virtue of an insertion made by the Finance Act,2002.
The case of CIT V Reliance Petro Products (2010) TPI 23 (SC) is :-
The assessee claimed deduction u/s 36 (1) (iii) for interest paid on loan taken for purchase of shares. The AO disallowed the interest u/s 14A and levied penalty u/s 271 (1) (c) on the ground that the claim was unsustainable. The penalty was deleted by the appellate authorities. On appeal by the department to the Supreme Court, HELD dismissing the appeal:-
"a mere making of the claim,which is not sustainable in law,will not amount to furnishing of inaccurate particulars regarding the income of the assessee".
Impact of the above decision will, as you know, depends on the facts of your case.


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