2015 (11) TMI 574 - AT - Income Tax

Penalty under section 271(1)(c) - allowability of business losses under a particular head of brought forward losses or the other head of brought forward losses - Held that - he assessee has disclosed all material facts relevant for its assessment to the Assessing Officer at the time of assessment itself. It is a case of honest difference of opinion between the assessee and the Revenue regarding allowability of business losses under a particular head of brought forward losses or the other head of brought forward losses. There being no material brought on record on behalf of the Revenue to suggest that the conduct of the assessee was not bona fide, we are of the considered view that it was not a fit case for levy of penalty for concealment of income or filing of inaccurate particulars of income under section 271(1)(c) of the Act, which is accordingly cancelled and ground of appeal of the assessee is allowed. In view of our decision that this case is not a fit case for levy of penalty under section 271(1)(c) of the Act on its merits, we are not adjudicating the other legal issues raised by learned counsel for the assessee on the legality of the penalty order. - Decided in favour of assessee.

Summary

Issues:
Penalty under section 271(1)(c) of the Income-tax Act, 1961 for furnishing inaccurate particulars of income.

Analysis:
The appellant contested the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961 for allegedly furnishing inaccurate particulars of income. The appellant argued that it had a bona fide belief in setting off business income against brought forward losses due to a change in shareholding, which was accepted by the Assessing Officer. The appellant also cited legal opinions supporting their claim. The appellant contended that the penalty was wrongly levied as the issue was debatable and there was no intention to evade tax. The Departmental representative opposed, citing non-bona fide conduct and violation of section 79 of the Act. Various case laws were referenced to support the Revenue's stance.

The Tribunal reviewed the submissions and documents provided. It noted the appellant's claim was based on a legal opinion received in 2001 and that the appellant was diligent in seeking advice. The Tribunal observed that the issue of setting off losses was debatable, as supported by previous assessments allowing such set-offs. The Tribunal found no evidence to suggest the appellant's actions were not voluntary or made under duress. The Tribunal concluded that the appellant's conduct was bona fide, disclosing all relevant facts to the Assessing Officer. As there was an honest difference of opinion between the appellant and the Revenue, the Tribunal held that it was not a case for penalty under section 271(1)(c) and canceled the penalty. The Tribunal did not address other legal issues raised by the appellant, as the penalty was canceled on its merits.

In conclusion, the Tribunal allowed the appeal of the assessee, canceling the penalty under section 271(1)(c) of the Income-tax Act, 1961. The decision was pronounced on March 18, 2015.