2011 (6) TMI 825 - AT - Income Tax

Summary

Issues Involved:
1. Whether the Ld CIT(A) erred in deleting the penalty u/s 271(1)(c) of the Income Tax Act, 1961.
2. Whether the assessee furnished inaccurate particulars of income by claiming non-allowable expenses and undervaluing the sale price of the plot of land sold.

Summary:

Issue 1: Deletion of Penalty u/s 271(1)(c)
The revenue appealed against the order of Ld CIT(A)-VII, New Delhi, which canceled the penalty imposed u/s 271(1)(c) of the Income Tax Act, 1961. The Assessing Officer (AO) had imposed a penalty of Rs. 2,44,221/- for furnishing inaccurate particulars of income. The Ld CIT(A) held that mere disallowance or addition does not justify the levy of penalty u/s 271(1)(c). The Ld CIT(A) referenced the Supreme Court judgment in CIT vs. Reliance Petroproducts P. Ltd. (2010) 322 ITR 158, which stated that merely making a claim that is not sustainable in law does not amount to furnishing inaccurate particulars of income.

Issue 2: Furnishing Inaccurate Particulars of Income
The AO noted that the assessee sold land at Pune for Rs. 18 lakhs, but the stamp valuation authority valued it at Rs. 20 lakhs. The assessee revised the computation of capital gains as per section 50C of the Act. Additionally, the AO disallowed expenses related to the increase in authorized share capital, citing judgments from the Hon'ble Apex Court and Delhi High Court. The assessee contended that the omissions were bona fide and not intentional. The Ld CIT(A) found that the assessee had disclosed all material facts and that the claims were bona fide, even if ultimately found legally unacceptable. The Tribunal upheld the Ld CIT(A)'s order, noting that the revenue did not provide evidence of inaccurate particulars. The Tribunal referenced the Supreme Court's explanation of "inaccurate particulars" in the Reliance Petroproducts case, concluding that the assessee's claims did not amount to furnishing inaccurate particulars of income.

Conclusion:
The Tribunal dismissed the revenue's appeal, upholding the Ld CIT(A)'s order that canceled the penalty u/s 271(1)(c) of the Income Tax Act, 1961. The Tribunal emphasized that the mere disallowance of claims does not justify the imposition of penalties unless there is evidence of inaccurate particulars or fraudulent claims.