2016 (12) TMI 1647 - AT - Income Tax

Penalty u/s 271(1)(c) - disallowance of deduction claimed u/s 80IB - Held that - It is noted from the records that the claims made by the assessee were based on experts advice and backed by certification issued in Form 10CCB. It is also noted that the revised return so filed was also a valid return filed within the stipulated time. The ld. AR relied on the decision of Jurisdictional High Court in the case of Chander Pal Bagga & Harshvardhan Chemicals Ltd 2002 (5) TMI 15 - RAJASTHAN High Court wherein it is held that no penalty can be imposed if exemption is claimed on the basis of advice of advocate. The Hon ble Supreme Court in the case of Price Waterhouse Coopers Pvt. Ltd 2012 (9) TMI 775 - SUPREME COURT held that inadvertent and bona fide error does not amount to concealment or furnishing of inaccurate particulars. It is also noted that the assessee had furnished the explanation vide letter dated 27-03-2013 (pg 183 to 188) that transaction is in the name nature of commercial transaction and the assessee received money from the company against the agreement to sale of land to the company and assessee has provided all the evidence in support of her contention. Thus in view of the above facts and circumstances of the case we concur with the findings of the ld. CIT(A) on the issue in question. Thus the appeal filed by the Revenue is dismissed.

Summary

Issues involved:
- Penalty imposition under section 271(1)(c) of the Income Tax Act, 1961 for disallowance of deduction claimed under section 80IB.
- Validity of revised return filed by the assessee under section 139(5) of the Income Tax Act.
- Imposition of penalty for furnishing inaccurate particulars of income.
- Application of section 271AAA of the Income Tax Act.
- Deeming provision of deemed dividend under section 2(22)(e) of the Income Tax Act.

Analysis:

Issue 1: Penalty imposition under section 271(1)(c) for disallowance of deduction claimed under section 80IB:
- The AO imposed a penalty based on disallowance of deduction claimed under section 80IB. The CIT(A) found that the claim was bona fide, supported by legal documents and expert advice. The assessee withdrew the claim and filed a revised return within the allowed time, paying taxes and interest. The CIT(A) noted that the AO summarily rejected the explanation without concrete evidence proving it false. The Tribunal concurred with the CIT(A) and dismissed the Revenue's appeal.

Issue 2: Validity of revised return filed under section 139(5):
- The assessee filed a revised return under section 139(5) after withdrawing the claim under section 80IB. The AO contended that the revised return was not valid, as there was no discovery of omission or wrong statement in the original return. However, the CIT(A) and the Tribunal found the revised return to be valid as it was filed within the stipulated time frame allowed by law.

Issue 3: Imposition of penalty for furnishing inaccurate particulars of income:
- The AO imposed a penalty for furnishing inaccurate particulars of income, alleging intentional misleading information. The CIT(A) and the Tribunal disagreed, noting that the claims were made based on expert advice and certifications, and inadvertent errors do not amount to concealment or furnishing inaccurate particulars, as held in relevant case laws.

Issue 4: Application of section 271AAA of the Income Tax Act:
- The CIT(A) noted that as per sub clause 3 of Section 271AAA, no penalty is leviable under section 271(1)(c) based on the facts and circumstances of the case. The Tribunal upheld this finding, further supporting the decision to cancel the penalty.

Issue 5: Deeming provision of deemed dividend under section 2(22)(e):
- The AO treated certain transactions as deemed dividend under section 2(22)(e) and imposed penalties. The CIT(A) canceled the penalty, citing that the transactions were in the nature of commercial dealings and supported by evidence. The Tribunal agreed with the CIT(A) and dismissed the Revenue's appeal.

In conclusion, the Tribunal upheld the CIT(A)'s decision to cancel the penalties imposed by the AO, considering the facts, legal provisions, and case laws presented during the proceedings.