2013 (1) TMI 594 - HC - Income Tax

Penalty u/s 271(1)(c) Concealment of income - Bonafide claim - Furnishing of inaccurate particulars - Deduction u/s 80HHC had been claimed without reducing deduction u/s 80IB Held that - The claim of the assessee for deduction u/s 80HHC was a bona fide claim. The claim of the assessee though later on was found to be untenable on the basis of subsequent decision of the Court, thus, it could not be held that the assessee had intentionally claimed deduction under Section 80HHC of the Act which was legally not permissible. This did not amount to furnishing of inaccurate particulars of income. Under the circumstances, no penalty, thus, could be levied u/s 271(1)(c) - In favour of assessee

Summary

Issues:
Levy of penalty under Section 271(1)(c) of the Income Tax Act, 1961 for furnishing inaccurate particulars by the assessee in respect of the claim made under Section 80HHC of the Act.

Detailed Analysis:

Issue 1: Levy of Penalty under Section 271(1)(c)
The High Court considered the appeal filed by the revenue against the order of the Income Tax Appellate Tribunal (ITAT) regarding the penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961. The Tribunal dismissed the appeal, leading to the present appeal by the revenue. The question at hand was whether the penalty was justified for furnishing inaccurate particulars by the assessee in relation to the claim under Section 80HHC of the Act.

Issue 2: Interpretation of 'Inaccurate Particulars'
The Court referred to the case law of Commissioner of Income Tax v. Reliance Petro Products (P) Ltd. to analyze the concept of 'inaccurate particulars.' It was highlighted that a mere unsustainable claim does not necessarily constitute furnishing inaccurate particulars. The revenue needed to demonstrate that the claim made by the assessee was in violation of statutory provisions to justify the penalty under Section 271(1)(c) of the Act.

Issue 3: Bona Fide Claim and Intentional Misrepresentation
The Court noted that the assessee's claim for deduction under Section 80HHC of the Act was considered bona fide. Even though the claim was later deemed untenable based on a subsequent court decision, it was not established that the assessee intentionally made a claim that was legally impermissible. Therefore, the Court concluded that there was no intentional furnishing of inaccurate particulars of income, leading to the dismissal of the appeal and ruling in favor of the assessee.

In conclusion, the High Court upheld the Tribunal's decision, emphasizing that the assessee's claim, though later found to be unsustainable, did not amount to intentional misrepresentation or furnishing of inaccurate particulars. Therefore, the penalty under Section 271(1)(c) of the Act was not justified in this case, and the appeal by the revenue was dismissed.