2016 (7) TMI 1348 - HC - Income Tax

Penalty under section 271(1)(c) - ingenue purchases - revised return for all three assessment years disclosing additional income in relation to purchases made from certain parties - proof of inaccurate particulars - wilful concealment - Held that - In the facts of the case it emerges that the declaration was made by the assessee under the advice of the chartered accountant and subsequently the same was rectified. Therefore there was no intention on the part of the assessee to commit any wilful concealment. Considering the ratio laid down in the above decision of CIT v. Reliance Petroproducts Private Limited (2010 (3) TMI 80 - SUPREME COURT) wherein held a mere making of a claim which is not sustainable in law by itself will not amount to furnishing inaccurate particulars - Decided in favour of the assessee and against the Department

Summary

Issues:
Challenge to judgment of Income-tax Appellate Tribunal regarding penalty under section 271(1)(c) of the Income-tax Act.

Analysis:
1. The appellant-Department challenged the Tribunal's decision on penalty imposition under section 271(1)(c) of the Income-tax Act. The court framed a substantial question of law regarding the deletion of the penalty.

2. The appellant argued that a revised return alone cannot lead to a presumption of concealment in the original return, citing the decision in LMP Precision Engg. Co. Ltd. v. Deputy CIT. The appellant sought to reverse the Commissioner of Income-tax (Appeals) decision and confirm the Assessing Officer's view.

3. The respondent-assessee relied on the Supreme Court decision in CIT v. Reliance Petroproducts Pvt. Ltd., emphasizing that mere non-acceptance of a claim in the return does not warrant a penalty under section 271(1)(c). Additionally, the respondent cited the Gujarat High Court decision in Nayan C. Shah v. ITO, highlighting that technical breaches may not justify penalties for suppression of particulars.

4. After hearing both parties and examining the case records, the court found that the assessee's declaration was made under the advice of a chartered accountant and was rectified subsequently, indicating no intention of wilful concealment. Relying on the decision in CIT v. Reliance Petroproducts Private Limited, the court ruled in favor of the assessee, stating that the issue was governed by the mentioned decision. Consequently, the court disposed of the appeals in favor of the assessee, overturning the penalty imposed by the Department under section 271(1)(c) of the Income-tax Act.