Section 271 of Income Tax Act, 1961— Penalty u/s 271(1)(c)— In the instant case, assessee filed appeal against the order of CIT on the following grounds—

CIT erred in levying penalty invoking section 271(1)(c) on the ground that the appellant furnished inaccurate particulars of income, there was nothing inaccurate in respect of the creditor.

CIT erred in confirming the penalty in respect of disallowance of salary paid to wife.

Held that—  the contention of the ld. AR that the penalty under Section 271(1)(c) of the Act is not sustainable as the assessee has not contested the quantum i.e. Assessment Order under Section 143(3) of the Act to buy peace with the Department whereas the CIT(Appeals) has overlooked the evidence produced before in the appellate proceedings and confirmed the penalty order of Assessing Officer. On this issue, we find the CIT(Appeals) has rejected the additional evidence under Rule 46A of the IT Rules. We are of the opinion that the assessee shall not gain any benefit by delaying the litigation and support our view on the principle of natural justice, and admit the additional evidence filed by the assessee.

On the second disputed issue with respect to the addition made by Assessing Officer in due to unreasonable salary paid to the assessee's wife under Section 40A(2)(b) of the Act, we are of the opinion that in the penalty proceedings, the assessing authority shall deal the issues independently and any addition in the quantum proceedings cannot be a gateway for levying the penalty. Therefore considering the overall facts and circumstances of the case, we restore the disputed issues to the file of CIT (Appeals) to adjudicate afresh considering the additional evidence filed by the assessee and allow the grounds of the assessee for statistical purposes.[SHRI S.J. ABHILASH VERSUS ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1, TUMKUR] [2019] 16 ITCD Online (13) [ITAT BANGALORE]