2010 (4) TMI 684 - AT - Income Tax

Penalty u/s 271(1)(c) - Claimed additional Depreciation on plant and machinery - Disallowance of Rs. 5,00,000/- against the total professional charges claim of Rs. 9074652 - Section 271(1)(c) which mandates of levy of penalty for concealment or furnishing of inaccurate particulars - Held that It is not the case that Assessing Officer had found any mistake, but the case is that the assessee had himself while preparing the details found the mistake and pointed out the same to the Assessing Officer - Hence this can not be said to be a case of concealment or furnishing of inaccurate particulars - The revenue s appeal is dismissed

Summary

Issues:
1. Deletion of penalty under section 271(1)(c) of the IT Act.
2. Claim of additional depreciation on plant and machinery.
3. Disallowance of professional charges for increasing capital.

Analysis:
1. The appeal concerned the deletion of a penalty under section 271(1)(c) of the IT Act by the Ld. Commissioner of Income Tax (Appeals) for the assessment year 2006-07. The primary issue was whether the penalty was justified for furnishing inaccurate particulars of income.

2. Regarding the claim of additional depreciation on plant and machinery, the Assessing Officer found that a portion of the claimed amount was not related to plant and machinery. The assessee acknowledged the error and requested condonation due to lack of clarification. The ITAT observed that the assessee's acknowledgment of the mistake demonstrated no intention to conceal income, as the error was self-identified and disclosed during assessment proceedings.

3. The second issue involved the disallowance of professional charges for increasing capital. The Assessing Officer disallowed a portion of the claimed amount, asserting it was capital expenditure. However, the ITAT noted that this was a matter of differing opinions on the nature of the expenditure, not a case of concealment or furnishing inaccurate particulars. Citing relevant legal precedents, the ITAT concluded that the penalty under section 271(1)(c) was not warranted in this scenario.

4. The ITAT referenced the decision in the case of CIT vs. Reliance Petro Products Ltd. to emphasize that the mere rejection of a claim by the Assessing Officer should not automatically lead to the imposition of a penalty under section 271(1)(c). Additionally, the ITAT invoked the principle from Hindustan Steel vs. State of Orissa to highlight that penalties should be imposed judiciously, especially in cases where there is no deliberate defiance of the law or dishonest conduct. Consequently, the ITAT upheld the Ld. Commissioner of Income Tax (Appeals) decision to delete the penalty.

5. Ultimately, the ITAT dismissed the revenue's appeal, affirming the Ld. Commissioner of Income Tax (Appeals) order to delete the penalty under section 271(1)(c) of the IT Act. The judgment was pronounced on 15/04/2010 following the conclusion of the hearing.