2013 (10) TMI 1120 - AT - Income Tax

Penalty u/s 271(1)(c) of the Income Tax Act Held that - Reliance has been placed on the case of CIT vs Reliance Petro Products (P) Ltd. 2010 (3) TMI 80 - SUPREME COURT , wherein it has been held that when no information given in the return is incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. Merely because the assessee claimed a deduction which has not been accepted by the department, penalty u/s.271(1)(c) is not attracted In the present case, penalty cannot be levied Decided against the Revenue.

Summary

Issues:
Appeal against deletion of penalty under section 271(1)(c) of the Income Tax Act related to assessment year 2004-05.

Detailed Analysis:

1. Background and Facts:
- Two appeals by Revenue against CIT(A) orders for assessment year 2004-05.
- Assessee is a trust from the USA involved in securities transactions in India.
- Assessee treated income as capital gains initially, later revised return based on AAR ruling.
- AO reopened proceedings under section 148, leading to penalty for concealment of income.

2. Legal Claim and Rulings:
- CIT(A) deleted penalty based on ITAT and Bombay High Court decisions.
- Assessee made legal claim post-disclosure of facts, relying on AAR ruling.
- Mumbai ITAT and Bombay High Court upheld no concealment of income in similar cases.
- No legal obligation to alert department about claim, full disclosure made in return.

3. ITAT Orders and Observations:
- ITAT orders in favor of assessee's legal claim after disclosure of relevant facts.
- No inaccurate particulars furnished, claim based on AAR ruling considered bonafide.
- Apex Court precedent cited to support non-leviability of penalty under section 271(1)(c).

4. Decision and Conclusion:
- Co-ordinate benches of Tribunal and Jurisdictional High Court upheld deletion of penalty.
- Orders of CIT(A) in both appeals upheld, Revenue's appeals dismissed.
- Penalty not leviable in cases of the named assessee companies.
- Decision pronounced on 16.09.2013 in open court.

This detailed analysis outlines the legal proceedings, the basis for the penalty deletion, and the judicial reasoning behind the decision to dismiss the Revenue's appeals against the deletion of penalties under section 271(1)(c) of the Income Tax Act for the assessment year 2004-05.