2018 (1) TMI 1384 - HC - Income Tax

Penalty u/s 271(1)(c) - payment made under the VRS scheme could have been deducted only to the extent of 20% under Section 35DDA - Held that - This Court notices that ITAT in its impugned order has relied upon a decision of this Court in Commissioner of Income Tax Vs. Dalmia (Pvt.) Ltd. 2009 (7) TMI 74 - DELHI HIGH COURT wherein as concerned with a somewhat similar situation i.e. the claim made in respect of VRS benefits and whether claim of whole amount as a deduction is contrary to Section 35DDA of the Act and could result in a justifiable penalty under Section 271(1)(c) of the Act. It was ruled that such could not be the consequence and the penalty was set aside. No substantial question of law. - decided against revenue.

Summary

Issues:
1. Imposition of penalty under Section 271(1)(c) of the Income Tax Act, 1961 for filing inaccurate particulars.
2. Interpretation of Section 35DDA of the Act in relation to VRS benefits.
3. Applicability of previous judicial decisions on similar matters.

Analysis:
1. The main issue in this case revolves around the imposition of a penalty under Section 271(1)(c) of the Income Tax Act, 1961 for filing inaccurate particulars. The Assessing Officer (AO) imposed the penalty on the grounds that the assessee had filed inaccurate particulars, specifically related to the deduction claimed under the Voluntary Retirement Scheme (VRS). The CIT (A) set aside the penalty, a decision that was upheld by the Income Tax Appellate Tribunal (ITAT).

2. The crux of the matter lies in the interpretation of Section 35DDA of the Act concerning VRS benefits. The contention was that the assessee should have claimed benefits in accordance with the provisions of Section 35DDA, which allows for a specific deduction related to VRS. Failure to do so was argued to constitute filing inaccurate particulars, misleading the Revenue. However, the ITAT's decision was influenced by a previous judgment in 'Commissioner of Income Tax Vs. Dalmia (Pvt.) Ltd.', where a similar issue was addressed regarding the claim of the whole amount as a deduction in contravention of Section 35DDA.

3. The High Court, in line with the previous decision in 'Dalmia's case', affirmed that claiming the entire amount as a deduction for VRS benefits does not warrant a penalty under Section 271(1)(c) of the Act. The Court noted that the lower Appellate Authority had already provided a concurrent finding in favor of the assessee, and since the benefits were granted in accordance with the precedent set by the previous judgment, no substantial question of law arose. Consequently, the appeal was dismissed based on the established legal principles and interpretations.

This comprehensive analysis of the judgment highlights the key legal issues, interpretations of relevant sections of the Income Tax Act, and the application of previous judicial decisions in determining the outcome of the case.