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2019 (8) TMI 501 - ITAT JAIPURPenalty u/s 271(1)(c) - disallowance of deduction u/s 80IA - HELD THAT:- Not only tax audit report but also audited financial statements were filed well within the time and only due to the shortage of fund, the assessee could not pay self-assessment tax, therefore, return could not be filed before due date. While declining claim of deduction u/s 80IA no defect was pointed out by the A.O. with regard to assessee’s eligibility save and except there was delay in filing return of income. Eligible amount of deduction U/s 80IA was mentioned in the tax audit report and clause (26) of Form 3CD. Thus, there was a substantial compliance of the provisions of Section 80IA read with Section 80AC of the Act by filing tax audit report with audited financial statement well in time. Under these facts and circumstances when there was full disclosure by the assessee and there was no failure on the part of the assessee to fully disclosed all the material facts with regard to claim of deduction U/s 80IA Penalty is not an automatic consequence for every addition to returned income. Merely because an addition is made to the income declared by the assessee, penalty u/s.271(1)(c) could not be imposed. Raising a bona fide legal claim in the return of income, even if it is ultimately found to be legally not acceptable, could not amount to concealing particulars of income or furnishing of inaccurate particulars of income. The assessee could not be saddled with penal consequences merely because a bona fide legal claim was made in the return of income and the same has not been accepted by the tax authorities or appellate authorities so far. Thus, the case of assessee could not be said to be a case of 'concealing particulars of income' or 'furnishing of inaccurate particulars of income' as contemplated under section 271(1)(c) In this case, all the material facts relevant to the computation of total income was duly furnished by the assessee and no deficiency in furnishing of such facts was pointed out either by the A.O. or by the ld. CIT(A). Deeming fiction of Explanation 1 to Section 271(1)(c) was not applicable to the assessee's case and merely on account of disallowance of certain claim, penalty cannot be imposed u/s 271(1)(c) of the Act - Decided in favour of assessee.
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