2016 (3) TMI 144 - AT - Income Tax

Penalty under section 271(1)(c) - gratuity payment claimed twice - Held that - The assessee in this case claimed the above expenditure in the P&L A/c and once again claimed it as allowable expenditure in the statement of income which leads to double claim of the same expenditure. During the assessment proceedings, the assessee was questioned by the AO, it was stated that inadvertently the claim was made on the basis of which the penalty was levied by the AO and confirmed by the CIT(A). The explanation given by the assessee for claiming the same expenditure for two times is very cryptic and too general in nature. There is no cogent and reliable evidence shown by the assessee how such claim has been made by the assessee. There is no base for such claim. Being so, in our opinion such an unadmissible claim could not have been claimed ad deduction by inadvertence for the second time Binding judgemnet of jurisdictional High Court in the case of Lanxess India Pvt. Ltd. (Successor of Bayer Indian Syntans Ltd.) v. ACIT reported in 2014 (12) TMI 571 - MADRAS HIGH COURT wherein held that the assessee should first show by cogent and reliable evidence that there was neither concealment of particulars of income nor furnished inaccurate particulars of income in order to repel penalty proceedings u/s.271(1)(c) of the Act. In view of this, we have no hesitation in confirming the levy of penalty u/s.271(1)(c) of the Act. - Decided against assessee

Summary

Issues:
Levy of penalty under section 271(1)(c) of the Act for double claim of gratuity payment.

Analysis:
The appeal was filed against the order of the Commissioner of Income Tax(A) for the assessment year 2006-07, focusing on the penalty under section 271(1)(c) of the Act. The Assessee, engaged in the business of manufacturing/trading, filed its return of income admitting a certain amount. The assessment resulted in disallowances, including double claim of gratuity payment, leading to a total disallowance. The Assessee admitted the inadvertent claim of gratuity payment but contested the penalty imposition. The Assessee argued that the mistake was unintentional due to a change in the accounting department, emphasizing lack of willful intent. However, the Department contended that the explanation provided was insufficient and lacked substantiation. The Department highlighted that even inadvertent mistakes leading to financial gain for the Assessee could attract penalty under section 271(1)(c) without requiring mens rea. The Tribunal considered the arguments, referring to relevant case laws and the provisions of section 271(1)(c) of the Act.

The Tribunal noted that the Assessee's claim of double deduction for gratuity payment was admitted but lacked a convincing explanation. The Assessee failed to provide substantial evidence supporting the inadvertent nature of the claim, leading to the penalty imposition. The Tribunal referenced the Supreme Court's ruling in a similar case to emphasize the need for concrete evidence to refute inaccurate particulars of income. The Tribunal distinguished other judgments cited by the Assessee, emphasizing the requirement for cogent and reliable evidence to avoid penalty under section 271(1)(c) of the Act. Ultimately, the Tribunal upheld the penalty imposition, citing the binding judgment of the jurisdictional High Court and rejecting the Assessee's arguments.

In conclusion, the Tribunal dismissed the appeal, confirming the levy of penalty under section 271(1)(c) of the Act for the double claim of gratuity payment. The decision was based on the lack of substantial evidence supporting the Assessee's inadvertent claim and the applicability of penalty provisions under the Act.