2014 (3) TMI 896 - AT - Income Tax

Penalty u/s 271(1)(c) of the Act Inaccurate particulars furnished - Held that - As decided in assessee s own case for the previous assessment years, merely an incorrect claim was made by the assessee, it would not tantamount to furnishing of inaccurate particulars so as to make the assessee liable for penalty u/s 271(1)(c) - in such situation no penalty can be levied u/s 271(1)(c) the decision in COMMISSIONER OF INCOME-TAX Versus RELIANCE PETROPRODUCTS PVT. LTD. 2010 (3) TMI 80 - SUPREME COURT followed - CIT(A) was of the view that the addition under the head of Shortage expenses, Tanker diesel expenses and Transport Expenses thus, the claim of the Revenue cannot be accepted as assessee s claims were merely incorrect which would not tantamount to furnishing inaccurate particulars so as to make the assessee liable for penalty u/s. 271(1)(c) Decided against Revenue.

Summary

Issues:
- Appeal against deletion of penalty u/s. 271(1)(c) of the IT Act for A.Y. 2006-2007.

Analysis:
1. Quantum Addition and Penalty Initiation:
- The Revenue filed an appeal against the deletion of penalty u/s. 271(1)(c) for inaccurate income particulars. The Assessing Officer (A.O.) made additions totaling Rs. 55,79,984 during scrutiny assessment. The A.O. initiated penalty proceedings for inaccurate income particulars amounting to Rs. 19,51,150, leading to a penalty of Rs. 6,56,758 being imposed.

2. CIT(A)'s Observations:
- The CIT(A) allowed the appeal, noting that the penalty was based on estimated disallowances of expenses without conclusive proof of concealment of income. The CIT(A) reduced the disallowances made by the A.O. on an ad hoc basis. Explanations provided by the assessee were considered during the quantum proceedings, and the concealment of income was not conclusively proven. The CIT(A) held that the penalty under section 271(1)(c) was not justified as the conditions of Explanation 1 were not satisfied.

3. Appellate Tribunal Decision:
- The Appellate Tribunal referred to a previous case for A.Y. 2005-06 where similar additions were made, and the appeal of the Revenue was dismissed. The Tribunal emphasized that incorrect claims do not amount to furnishing inaccurate particulars for penalty under section 271(1)(c). Citing the decision in Reliance Petroproducts Pvt. Ltd. case, the Tribunal upheld the CIT(A)'s order and dismissed the Revenue's appeal for A.Y. 2006-2007.

4. Conclusion:
- The Tribunal's decision was based on the principle that mere incorrect claims do not constitute inaccurate particulars for penalty under section 271(1)(c). As the additions were made on an estimated basis without conclusive proof of concealment, the Tribunal upheld the CIT(A)'s decision to delete the penalty. The appeal of the Revenue was dismissed, affirming that the assessee's claims, though incorrect, did not warrant a penalty under the IT Act.