2014 (1) TMI 1264 - AT - Income Tax

Deletion of penalty u/s 271(1)(c) of the Act Disallowance of deduction u/s 80P of the Act Held that - The Assessing Officer did not allow the claim of the assessee u/s 80P(2)(e) made the disallowance thus, it cannot be said that the assessee did not disclose all the particulars truly because the claim of deduction u/s 80P(2)(e) was made in the returned income - The Assessing Officer did not accept the claim of the assessee and that can be a ground for making the addition but not for levying the penalty u/s 271(1)( c) of the Act Relying upon CIT vs Reliance Petroproducts (P) Ltd. 2010 (3) TMI 80 - SUPREME COURT - Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars - Where there is no finding that any details supplied by the assessee 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) - The CIT(A) was fully justified in deleting the penalty levied u/s 271(1) ( c) of the Act by the Assessing Officer because in the present case also all the informations were given by the assessee in the return of income, so the assessee cannot be held guilty of furnishing inaccurate particulars of income or concealment of income Decided against Revenue.

Summary

Issues Involved:
- Appeal against deletion of penalty under section 271(1)(c) of the Income Tax Act, 1961 for Assessment Years 2003-04, 2004-05, 2005-06, and 2006-07.

Analysis:

Issue 1: Assessment Year 2003-04
- The Department appealed against the deletion of penalty of Rs. 7,60,580/- under section 271(1)(c) of the Act.
- The Assessing Officer disallowed deduction u/s 80P, leading to an income addition.
- The CIT(A) partially allowed relief, but the matter was restored to the Assessing Officer by ITAT.
- The CIT(A) disallowed the deduction, resulting in income enhancement and penalty proceedings.
- The assessee argued no concealment or inaccurate particulars, citing legal precedents.
- The CIT(A) deleted the penalty, emphasizing that the claim particulars were disclosed in the return.
- The Tribunal upheld the CIT(A)'s decision based on the Supreme Court's ruling on inaccurate particulars.

Issue 2: Assessment Years 2004-05, 2005-06, and 2006-07
- Similar grievances of penalty deletion under section 271(1)(c) were raised by the Department.
- The facts and arguments mirrored those of the Assessment Year 2003-04 case.
- The Tribunal applied its findings from the earlier case to dismiss the appeals by the Revenue.

In conclusion, the Tribunal dismissed all appeals by the Department, upholding the deletion of penalties for the respective assessment years. The decisions were based on the principle that mere incorrect claims do not amount to furnishing inaccurate particulars unless the return information is found to be incorrect or false. The Tribunal's analysis aligned with legal precedents and the Supreme Court's interpretation of section 271(1)(c) of the Income Tax Act, emphasizing the importance of accurate disclosure in the return of income to invoke penalties.