2011 (1) TMI 1357 - AT - Income Tax

Summary

Issues involved:
The judgment involves penalty imposition u/s 271(1)(c) for claiming excess deduction u/s 80IB and prior period expenses in A.Y. 2005-06.

Claim of 100% deduction under section 80IB:
The assessee claimed 100% deduction under section 80IB for A.Y. 2005-06, even though the initial 5-year period of eligibility had ended in 2004-05. The Assessing Officer (A.O.) initiated penalty proceedings for inaccurate particulars of income/concealment of income. The assessee contended that the claim was inadvertent and cooperated with authorities, withdrawing the excess claim and paying tax immediately. The Tribunal found the claim to be a bonafide mistake and not deliberate concealment, citing relevant case laws.

Claim of prior period expenses:
The assessee claimed an amount for power and electricity expenses pertaining to 2003 and earlier period, which the A.O. disallowed as a prior period claim. The A.O. initiated penalty proceedings u/s 271(1)(c) for this issue as well. The assessee argued that the expenses were paid under protest in the earlier year and charged to revenue in the subsequent year, based on events. The Tribunal found that there was no intention to conceal income, as the claim was based on accrual basis and audited accounts.

Legal Principles and Precedents:
The Tribunal referred to the legal principles established by the Hon'ble Supreme Court in various cases, including Reliance Petro Products Pvt. Ltd., emphasizing that a mere incorrect claim does not amount to furnishing inaccurate particulars. The Tribunal also cited judgments where penalties were deleted due to debatable issues or inadvertent mistakes, supporting the assessee's contentions in this case.

Conclusion:
After considering submissions and legal precedents, the Tribunal concluded that the excess claim under section 80IB and prior period expenses did not warrant penalty u/s 271(1)(c). The Tribunal found the claims to be bonafide mistakes and not deliberate attempts to conceal income. Therefore, the penalty was withdrawn on these grounds, and the appeal was allowed.

Judgment Date:
The order was pronounced in the open court on 19th January 2011.