2013 (12) TMI 528 - AT - Income Tax

Penalty u/s 271(1)(c) Held that - There is no concealment nor furnishing of inaccurate particulars in this case. The assessee had made disclosures and had made conscious claims for interest payable Following CIT vs.Reliance Petro 2010 (3) TMI 80 - SUPREME COURT - To attract penalty, the details supplied in the return must not be accurate, not exact or correct, not according to the truth or erroneous. Where there is no finding that any details supplied by the assesse in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under Section 271(1)(c) Decided against Revenue.

Summary

Issues:
1. Disallowance of expenses claimed on accrual basis.
2. Disallowance of expenses incurred on removal of squatters.
3. Levying penalty for furnishing inaccurate particulars of income.

Issue 1: Disallowance of expenses claimed on accrual basis

The appellant company had claimed deductions for expenses incurred on a real estate project on an accrual basis. The Assessing Officer disallowed the claims for interest payable to a developer in various assessment years, stating that deductions would only be allowed upon actual payment. The CIT (A) allowed the claims on accrual basis, but the Assessing Officer disallowed them again in subsequent years. The First Appellate Authority observed that there was no finding of the claims being bogus and that the appellant had consistently followed its stand from earlier years. The penalty was levied by the Assessing Officer for furnishing inaccurate particulars of income. The Tribunal held that there was no concealment or furnishing of inaccurate particulars, as the appellant had disclosed the claims and made conscious decisions based on differing opinions on the year of allowability.

Issue 2: Disallowance of expenses incurred on removal of squatters

The company claimed expenses for removing squatters on an accrual basis, which were disallowed by the Assessing Officer. The CIT (A) upheld the claim for deduction on an accrual basis in a previous year. The Assessing Officer rejected the claim in subsequent years, stating that the liability was contingent and could only be deducted when actually incurred. The Tribunal found that the appellant had made conscious claims based on differing opinions regarding the year of allowability, and there was no concealment or furnishing of inaccurate particulars.

Issue 3: Levying penalty for furnishing inaccurate particulars of income

The penalty was levied on the grounds that the appellant furnished inaccurate particulars of income. However, the Tribunal held that there was no concealment or inaccurate particulars furnished by the appellant. Citing a Supreme Court decision, it was noted that making an incorrect claim, not sustainable in law, does not amount to furnishing inaccurate particulars. The Tribunal agreed with the First Appellate Authority's decision to delete the penalty, as the appellant had made disclosures and claims based on differing interpretations of the law.

In conclusion, the Tribunal dismissed the Revenue's appeal, finding no grounds for upholding the penalty or disallowing the expenses claimed by the appellant. The judgment emphasized the importance of disclosing information and making claims based on differing legal interpretations without constituting concealment or inaccurate particulars.