2016 (2) TMI 517 - HC - Income Tax

Penalty u/s 271(1)(c) - deduction under Section 80IC disallowed - Held that - Admittedly, the assessee had filed return of income declaring nil income on 30.9.2009 after claiming deduction under Section 80IC. At the time of making return, the issue was debatable and penalty could not have been levied. Further, the Tribunal noticed that the assessee had disclosed all the particulars of the income and had not concealed anything. Once proper disclosure had been made, penalty was not attracted in view of the judgment of the Apex Court in CIT vs. Reliance Petroproducts Pvt. Limited, (2010 (3) TMI 80 - SUPREME COURT ). Further the return which was filed on the basis of the certificate issued by the Chartered Accountant though under mistake, the assessee could take the benefit on the basis of bonafide belief. - Decided in favour of assessee

Issues involved:
1. Appeal against the order of the Income Tax Appellate Tribunal canceling penalty under section 271(1)(c) for claiming deduction under section 80IC.
2. Validity of the Tribunal's decision allowing the assessee to claim deduction until the decision of the Supreme Court despite a High Court decision in favor of the revenue.
3. Alleged failure of the Tribunal to consider the Full Bench decision of the Punjab and Haryana High Court regarding non-following of jurisdictional High Court decisions.
4. Tribunal's failure to appreciate the decisions of the jurisdictional High Court in previous cases.
5. Allegation that the Tribunal did not consider the detailed findings given by the Commissioner of Income Tax (Appeals) in his order.

Analysis:

1. The appeal was filed by the appellant-revenue against the order of the Income Tax Appellate Tribunal canceling the penalty under section 271(1)(c) for claiming deduction under section 80IC. The Tribunal held that at the time of filing the return, the issue was debatable, and penalty could not have been levied. The Tribunal noted that the assessee had disclosed all income particulars and had not concealed anything. The Tribunal also considered the judgment of the Supreme Court in CIT vs. Reliance Petroproducts Pvt. Limited, which stated that penalty is not attracted if proper disclosures have been made. The Tribunal found that the assessee had a bonafide belief in claiming the deduction and set aside the penalty.

2. The Tribunal allowed the assessee to claim deduction until the decision of the Supreme Court, despite a High Court decision in favor of the revenue. The Tribunal considered that the assessee had the right to make the claim based on the decision of the Delhi High Court, which was favorable to the assessee. The Tribunal emphasized that the issue was debatable at the time of filing the return, and there was a short gap between the publication of the Supreme Court decision and the filing of the return.

3. The Tribunal was alleged to have not appreciated the Full Bench decision of the Punjab and Haryana High Court in the case of Smt. Aruna Luthra, which held that non-following of jurisdictional High Court decisions amounts to a mistake apparent from the record. However, the Tribunal's decision was based on the debatable nature of the issue at the time of filing the return and the absence of concealment of income particulars.

4. The Tribunal was accused of not appreciating the decisions of the jurisdictional High Court in the cases of CIT vs. Ram Lal Baba Lal and CIT vs. Guru Lal Bal Chand. However, the Tribunal's decision was consistent with the principle that penalty under section 271(1)(c) is not attracted if there is no concealment of income particulars and proper disclosures have been made.

5. The appellant-revenue alleged that the Tribunal did not consider the detailed findings given by the Commissioner of Income Tax (Appeals) in his order. However, the Tribunal's decision was based on the assessee's disclosure of all income particulars and the absence of concealment, which led to the cancellation of the penalty. The Tribunal's decision was in line with the legal principles established by the Supreme Court and previous High Court judgments.

In conclusion, the High Court dismissed the appeal by the revenue as the Tribunal's decision was based on a plausible view supported by the material on record. The High Court found no illegality or perversity in the Tribunal's decision and concluded that no substantial question of law arose, warranting the dismissal of the appeal.

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