2011 (7) TMI 1185 - AT - Income Tax

Summary

Issues involved: Appeal against deletion of penalty u/s 271(1)(c) of the Income Tax Act, 1961 by CIT(A).

Issue 1: Deletion of penalty under Section 271(1)(c)

The Revenue appealed against the CIT(A)'s decision to delete the penalty of Rs. 7,09,557 under Section 271(1)(c) of the Act. The CIT(A) had canceled the penalty based on the grounds that the disallowances were made on an estimate basis and not conclusively proven as concealment of income. The CIT(A) highlighted that the explanations provided were not proven to be false or bogus. It was noted that the penalty was initiated for furnishing inaccurate particulars of income, but the conditions of Explanation 1 to the section were not satisfied. The CIT(A) concluded that it was not a fit case for the levy of penalty under Section 271(1)(c) and directed the deletion of the penalty.

Issue 2: Arguments and Decision

During the hearing, the assessee's counsel argued that all required details were furnished and explanations offered were not false or bogus. The additions made by the AO were based on estimates, which were later reduced in appeal. The counsel contended that disallowance on an estimated basis does not amount to concealment of income warranting a penalty under Section 271(1)(c). Reference was made to the decision in CIT Vs. Reliance Petroproducts Pvt. Ltd., where it was held that an incorrect claim does not constitute furnishing inaccurate particulars. After hearing both parties, the Tribunal found no justification to interfere with the CIT(A)'s order. It was observed that no specific expenditure was deemed bogus, and the case aligned with the Supreme Court's decision in Reliance Petroproducts Pvt. Ltd., emphasizing that making an incorrect claim does not equate to furnishing inaccurate particulars. Therefore, the Tribunal upheld the CIT(A)'s decision to delete the penalty under Section 271(1)(c).

In conclusion, the Appellate Tribunal upheld the CIT(A)'s decision to delete the penalty under Section 271(1)(c) of the Income Tax Act, 1961, based on the grounds that the disallowances were made on an estimate basis and not proven as concealment of income. The Tribunal emphasized that making an incorrect claim does not amount to furnishing inaccurate particulars, as per the Supreme Court's ruling in Reliance Petroproducts Pvt. Ltd. Consequently, the Revenue's appeal against the deletion of the penalty was dismissed.