2014 (2) TMI 457 - AT - Income Tax

Levy of penalty u/s 271(1)(c) of the Act Concealment of income - Inaccurate particulars furnished Held that - The decision in CIT Vs. Reliance Petroproducts Pvt. Ltd. 2010 (3) TMI 80 - SUPREME COURT followed - 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). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee - Such a claim made in the return cannot amount to furnishing inaccurate particulars - The AO merely proceeded on the footing that the assessee furnished inaccurate particulars by claiming addition of the expenditure which is not otherwise admissible under law previously also, the penalty is not leviable and the Revenue appears to have not preferred any appeal - there is no malafide intention on the part of the assessee in claiming the impugned expenditure as revenue in nature the order of the CIT(A) upheld Decided against Revenue.

Summary

Issues:
Penalty under section 271(1)(c) for furnishing inaccurate particulars of income.

Analysis:
The Revenue appealed against the cancellation of penalty under section 271(1)(c) by the CIT(A) for Assessment Year 2003-04. The AO had imposed the penalty, contending that the assessee furnished inaccurate particulars of income by claiming a deduction for loss on the sale of fixed assets. The AO believed the loss was capital in nature and not eligible for deduction. The assessee argued that the error was unintentional and promptly rectified upon discovery, with no malafide intent. The CIT(A) found no deliberate act of concealment or willful furnishing of inaccurate particulars, citing the Supreme Court's decision in Reliance Petroproducts P. Ltd 322 ITR 158. The CIT(A) deleted the penalty, emphasizing the absence of malafide intention or willful evasion of taxes.

The Revenue challenged the CIT(A) decision, arguing that the assessee furnished inaccurate particulars leading to concealment of income. The assessee maintained that the error was inadvertent and promptly acknowledged, with full disclosure during assessment proceedings. The Tribunal noted that the Revenue did not invoke Explanation 1 to section 271(1)(c) and the AO's basis for penalty was the claim of an inadmissible expenditure. Referring to a similar case for A.Y. 2004-05 where the penalty was not levied, the Tribunal found no malafide intent on the part of the assessee in claiming the expenditure as revenue. The Tribunal upheld the CIT(A) decision, dismissing the Revenue's appeal.

In conclusion, the Tribunal upheld the CIT(A) order, dismissing the Revenue's appeal against the cancellation of the penalty under section 271(1)(c). The Tribunal found no malafide intent on the part of the assessee in claiming the expenditure as revenue, in line with the Supreme Court's interpretation of furnishing inaccurate particulars. The decision emphasized the absence of deliberate concealment or willful evasion of taxes, leading to the deletion of the penalty.