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2014 (2) TMI 313 - AT - Income TaxPenalty u/s 271(1)(c) - Held that - The deferment of sales tax has been claimed on the basis of method of accounting followed by the assessee for the earlier year - The accounting method so followed has also been mentioned in the notes to accounts forming part of the audited accounts - It cannot be said that the assessee has furnished inaccurate particulars of income - The return filed by the assessee was subjected to scrutiny assessment proceedings u/s 143(3) of the Act and the Assessing Officer completed the assessment accepting the claim made by the assessee towards deferred sales tax revenue - Only because the method of accounting was not accepted by the CIT in proceedings u/s 263, it automatically cannot lead to the conclusion that the assessee has either concealed his income or furnished inaccurate particulars of income - Relying upon the decision in CIT vs. Reliance Petro Chemicals 2010 (3) TMI 80 - SUPREME COURT - The assessee cannot be accused of concealing his income or furnishing of inaccurate particulars of income as the disallowance has been made u/s 43B of the Act on the ground that the assessee has not been able to produce evidence towards remittance of the amount to the government treasury - Decided against Revenue.
Issues Involved:
1. Deletion of penalty imposed under section 271(1)(c) of the Income Tax Act. 2. Disallowance of deferred sales tax liability. 3. Disallowance of sales tax liability under section 43B of the Income Tax Act. Issue-Wise Detailed Analysis: 1. Deletion of Penalty Imposed Under Section 271(1)(c) of the Income Tax Act: The department's sole grievance was regarding the CIT (A) deleting the penalty imposed under section 271(1)(c) of the Act. The Assessing Officer had initiated penalty proceedings alleging the furnishing of inaccurate particulars of income by the assessee. However, the CIT (A) observed that there was no concealment of particulars of income or furnishing of inaccurate particulars by the assessee. The CIT (A) noted that the claims made by the assessee were based on the accounting method consistently followed and disclosed in the return of income. The CIT (A) also referenced the Supreme Court decision in CIT Vs. Reliance Petro Products (P) Limited, which held that merely making an incorrect claim does not amount to furnishing inaccurate particulars. Consequently, the CIT (A) deleted the penalty, and the appellate tribunal upheld this decision, finding no reason to interfere with the CIT (A)'s order. 2. Disallowance of Deferred Sales Tax Liability: The CIT (A) had disallowed the deferred sales tax liability claimed by the assessee, holding that the accounting method (NPV method) adopted by the assessee was not recognized by any Accounting Standards. The CIT (A) noted that the assessee had consistently followed this method and disclosed it in the notes to accounts. The tribunal observed that the assessee had submitted all material facts and followed the same accounting method as in previous years. The disallowance was based on the CIT's view that the method of accounting was incorrect, but this did not imply that the assessee had furnished inaccurate particulars of income. 3. Disallowance of Sales Tax Liability Under Section 43B of the Income Tax Act: The sales tax liability of Rs.23,75,134/- was disallowed by the Assessing Officer under section 43B of the Act due to the assessee's failure to produce evidence of remittance to the government account. The CIT (A) noted that the absence of information might lead to disallowance but not necessarily to the levy of penalty. The tribunal upheld this view, stating that the disallowance under section 43B did not amount to furnishing inaccurate particulars of income or concealing income. Conclusion: The appellate tribunal upheld the CIT (A)'s order, which deleted the penalty imposed under section 271(1)(c) of the Act. The tribunal agreed that the assessee had not concealed income or furnished inaccurate particulars, as the claims were based on a consistently followed and disclosed accounting method. The tribunal found no reason to interfere with the CIT (A)'s order and dismissed the department's appeal. The order was pronounced in court on 05-02-2014.
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