2015 (12) TMI 102 - AT - Income Tax

Penalty u/s 271(1)(c) - deduction under section 80-I denied - Held that - As evident from the record that the assessee has filed returns of income for the impugned assessment years claiming deduction under section 80I of the Act after the order of the Tribunal. Therefore, the assessee has a reasonable belief that it is entitled for deduction under section 80I of the Act. The legal position has been changed after the judgment of the Hon ble High Court of Allahabad in the assessee s case in the year 2012 when a contrary view was taken and it was held that the assessee is not entitled for deduction under section 80I of the Act. Relying upon the verdict of the Hon ble High Court of Allahabad, the Revenue has levied penalty under section 271(1)(c) of the Act without realizing the fact that when return was filed, there was the order of the Tribunal in the assessee s own case, in which it was held that the assessee is entitled for deduction under section 80-I of the Act. Therefore, there is neither concealment of income nor furnishing of inaccurate particulars on the part of the assessee. Under these circumstances, we are of the considered view that the Revenue has wrongly levied the penalty under section 271(1)(c) of the Act in the impugned assessment years whereas the assessee has claimed deduction under section 80I of the Act on the basis of the order of the Tribunal. - Decided in favour of assessee.

Summary

Issues:
Appeal against penalty under section 271(1)(c) of the Income-tax Act, 1961.

Analysis:
1. The appeals were filed against the penalty imposed under section 271(1)(c) of the Income-tax Act. The grounds raised included objections related to the initiation of penalty proceedings, technical aspects, limitation, and the applicability of section 271(1)(c) to the case. The appellant argued that there was no concealment or inaccurate particulars provided during the assessment proceedings.

2. The history of the case dates back to 1991 when the Tribunal allowed deduction under section 80I of the Act for the assessee. However, subsequent judgments by the High Court of Allahabad in 2012 contradicted this allowance, leading to the disallowance of the deduction claimed by the assessee in the impugned assessment years. The Revenue initiated penalty proceedings under section 271(1)(c) based on the High Court's judgment.

3. The counsel for the assessee contended that since the deduction was claimed based on the Tribunal's order, there was no concealment or furnishing of inaccurate particulars. The issue became debatable due to conflicting judgments, making the penalty unjustifiable. Various case laws were cited to support this argument.

4. Upon examination, it was found that the assessee had a reasonable belief in claiming the deduction under section 80I of the Act based on the Tribunal's order. The subsequent change in legal position by the High Court's judgment did not imply concealment or inaccurate particulars by the assessee. Therefore, the penalty under section 271(1)(c) was deemed unwarranted, and the orders of the lower authorities were set aside, leading to the deletion of the penalty in all assessment years.

5. The Tribunal concluded that the Revenue had wrongly imposed the penalty without considering the assessee's genuine belief in claiming the deduction as per the Tribunal's order. The penalty was deemed unjustified, and the appeals of the assessees were allowed, resulting in the deletion of the penalties imposed by the Assessing Officer.

This detailed analysis outlines the issues raised, the historical context of the case, arguments presented by both parties, relevant case laws cited, and the Tribunal's decision in favor of the assessees.