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2014 (11) TMI 374 - AT - Income TaxDeletion of penalty u/s 271(1)(c) Retrospective amendment in clause (1) of Explanation 1 to section 115JB - Held that - As decided in assessee s own case for the earlier assessment year, it has been held that it cannot be held that the appellant had furnished any inaccurate particulars or concealed any material fact - there is no valid reason to interfere with the observations and findings of the CIT(A) as the legal position is well settled that the assessee cannot anticipate on the date of fling of return which was admittedly filed on 29.11.2006, that a retrospective amendment in law would be introduced by Finance Act 2009 w.e.f. 1.4.2001 i.e. subsequent to the date of filing return - Even otherwise neither it can be said that the assesee s claim was not bonafide nor the material facts were not properly disclosed by the assesee at the time of filing of return - the return was filed on 29.11.2006 based on the past position on the very same facts and prior to the amendment to the provision of the Act was introduced which subsequently inserted with retrospective effect by Finance Act 2009 - the CIT(A) was right in cancelling and deleting the penalty as the provisions retrospective inserted by Finance Act 2009 was not before the assessee at the time of filing of return on 29.11.2006 - the CIT(A) was right in cancelling the penalty Decided against revenue.
Issues Involved:
1. Deletion of Penalty under Section 271(1)(c) of the Income Tax Act, 1961. 2. Retrospective Amendment of Section 115JB. 3. Bona Fide Claim and Disclosure of Material Facts by the Assessee. Issue-wise Detailed Analysis: 1. Deletion of Penalty under Section 271(1)(c) of the Income Tax Act, 1961: The primary issue in the appeal was the deletion of a penalty amounting to Rs. 1,53,65,958/- imposed under Section 271(1)(c) of the Income Tax Act, 1961 by the Assessing Officer (AO). The Commissioner of Income Tax (Appeals) [CIT(A)] had previously cancelled this penalty, a decision which the revenue contested. The Tribunal upheld the CIT(A)'s decision, emphasizing that the penalty was incorrectly imposed based on a retrospective amendment to the Act, which was not foreseeable by the assessee at the time of filing the return. 2. Retrospective Amendment of Section 115JB: The Tribunal noted that the penalty imposed by the AO was based on the retrospective amendment introduced by the Finance Act, 2009, effective from 1st April 2001. The amendment required the inclusion of provisions for doubtful debts in the book profit calculation under Section 115JB. However, at the time of filing the return, the assessee had relied on prevailing judicial pronouncements, such as the Supreme Court judgment in Apollo Tyres Ltd. vs. CIT and the Delhi High Court ruling in Commissioner of Income-tax, Delhi-IV v. HCL Comnet Systems & Services Ltd., which did not necessitate such inclusion. Therefore, the Tribunal held that the assessee could not have anticipated this retrospective amendment and thus could not be penalized for non-compliance. 3. Bona Fide Claim and Disclosure of Material Facts by the Assessee: The Tribunal concurred with the CIT(A)'s observation that the assessee had made a bona fide claim based on the legal position at the time of filing the return. The return was filed on 29th November 2006, well before the retrospective amendment was introduced in 2009. The Tribunal emphasized that the assessee had not concealed any material facts or furnished inaccurate particulars. The claim was supported by judicial pronouncements and legal opinions available at that time. The Tribunal cited several cases, including CIT vs. HEG Ltd. and CIT vs. Reliance Petroproducts (P) Ltd., to support the view that no penalty should be imposed for claims made in good faith based on the prevailing legal framework. Conclusion: The Tribunal upheld the CIT(A)'s decision to delete the penalty, emphasizing that the assessee could not have foreseen the retrospective amendment and had acted in good faith based on the legal position at the time of filing the return. The appeal of the revenue was dismissed, confirming that the penalty under Section 271(1)(c) was not warranted in this case.
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