2015 (9) TMI 1244 - HC - Income Tax

Penalty levied u/s 271 (1) (c) - AO disallowed the claim by referring to the Explanation under Section 80I A (13) - ITAT deleted the penalty - Held that - In the facts of the present case, the view taken by the ITAT that the deduction claimed was bona fide and on the basis of the certificate of the auditors appears to be a plausible one and cannot be said to be suffering from any perversity. This was not a case whether the Assessee had not disclosed the full details. It had claimed the deduction only on the basis of the report of the auditors as required by the Act.- Decided in favour of the Assessee.

Summary

Issues:
Appeals against ITAT order deleting penalty under section 271(1)(c) of the Income Tax Act, 1961 for AY 2007-08.

Analysis:
1. The appeals by the Revenue were directed against the ITAT order allowing the appeals in favor of the Assessees, who are joint ventures, for AY 2007-08. The central question was whether the ITAT erred in law and on merits in deleting the penalty levied under section 271(1)(c) of the Income Tax Act, 1961.

2. During assessment proceedings, the AO disallowed the Assessee's claim under Section 80IA based on the Explanation under Section 80IA(13) of the Act. The additions made by the AO were not challenged by the Assessee, leading to penalty proceedings being initiated for furnishing inaccurate particulars of income.

3. The ITAT noted that the Explanation under Section 80IA(13) was inserted by the Finance Act, 2007, after the Assessee claimed the deduction. The Assessee had claimed the deduction based on the auditor's report in Form 10CCB, overlooking the new provision. The ITAT found that the Assessee and its auditors had not intentionally concealed information but claimed the deduction in good faith based on the auditors' report as required by law.

4. The Court differentiated the present case from a previous judgment and upheld the ITAT's view that the Assessee's claim was bona fide and based on the auditors' certificate. It was deemed a plausible decision without any perversity, leading to the question being answered in favor of the Assessee and against the Revenue.

5. Ultimately, the appeals were dismissed, affirming the ITAT's decision to delete the penalty under section 271(1)(c) for AY 2007-08.