2011 (8) TMI 630 - AT - Income Tax

Penalty under section 271(1)(c) of the Income-tax Act, 1961 - income from house property - assessee has let out a property which was a leased property from DDA. During the relevant financial year, the assessee has paid sub-letting charges to the DDA - penalty has been levied on account of claim of sub-letting charges - assessee at the time of filing the original return of income assessee himself has not made such claim which shows that assessee was under the firm belief that such claim is not allowable in the law - Held that - subletting charges are not an admissible, It was, thus, not a wrong claim preferred by the assessee, but is a clear case of false claim , Assessing Officer was justified in imposing the penalty under section 271(1)(c) of the Act. The same, therefore, upheld.

Summary

Issues:
Sustaining penalty under section 271(1)(c) of Rs. 1,40,760 under Income-tax Act, 1961.

Analysis:
The only issue in this case pertains to the imposition of a penalty under section 271(1)(c) of the Income-tax Act, 1961. The appellant, a private limited company deriving income from a Colour Photo Lab and house property, filed a revised return claiming sub-letting charges paid to the DDA, which were disallowed during assessment. The Assessing Officer imposed a penalty for furnishing inaccurate particulars in the return of income, which was upheld by the CIT(A). The key contention was that the claimed sub-letting charges were not admissible deductions under the Income-tax Act.

The Tribunal analyzed the facts and legal provisions in detail. It noted that the original return did not include the claim for sub-letting charges, which were paid for a period beyond the relevant financial year. The revised return included these charges under 'House-tax paid,' which was not supported by any documentary evidence. The Tribunal emphasized that the subletting charges were not taxes levied by a local authority and, therefore, not deductible. The appellant's argument of seeking advice from a tax expert was deemed unsubstantiated, as no evidence of such advice or its legitimacy was provided.

Furthermore, the Tribunal referenced precedents from the Hon'ble jurisdictional Delhi High Court, emphasizing cases where ex-facie bogus claims attracted penalties. The judgments highlighted the distinction between genuine errors and false claims, underscoring that claims made without legal basis could lead to penalties. The Tribunal concluded that the appellant's claim for sub-letting charges was clearly false and lacked bona fide intent, as evidenced by the original return's omission of such claims.

Ultimately, the Tribunal upheld the penalty imposed under section 271(1)(c), citing the appellant's failure to establish the genuineness of the claim made in the revised return. The decisions of the Hon'ble jurisdictional High Court further supported the Tribunal's stance on penalizing false claims. Therefore, the appeal of the assessee was dismissed, affirming the penalty under consideration.