2015 (10) TMI 2752 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - deduction u/s 80IC claimed @100% was reduced to 25% of the total profit declared being the 6th year of manufacturing activities of the Industrial undertaking - bonafide claim - HELD THAT - Assessee claimed deduction under section 80IC in assessment year under appeal in a bonafide manner and mere fact that claim of assessee has been disallowed would not prove it to be a fit case of levy of penalty for filing inaccurate particulars of income. The issue of claim of deduction was debatable and bonafide. However there was conflict for determination of provision of law. Merely making a claim of 100% deduction against 25% as per opinion of the Assessing Officer under section 80IC of the Act would not be at par with concealment of income or furnishing inaccurate particulars of income. It is not a fit case of levy of penalty under section 271(1)(c) of the Act because it is well settled that levy of penalty is not automatic in each and every case as it depends upon facts and circumstances of the case. Since the assessee s claim of deduction under section 80IC have been allowed in earlier years @ 100% and admittedly assessee undertook substantial expansion in assessment year under appeal therefore assessee made bonafide claim of deduction under section 80IC of the Act and there were no judicial pronouncements against the assessee on the date of making such a claim. Therefore it could not be construed that assessee furnished inaccurate particulars of income so as to levy the penalty under section 271(1)(c) - set aside the orders of authorities below and cancel the penalty.- Decided in favour of assessee.

Summary

Issues involved:
Challenge against the penalty under section 271(1)(c) of the Income Tax Act for assessment year 2009-10.

Detailed Analysis:
1. The appellant, an assessee firm, challenged the penalty imposed under section 271(1)(c) of the Income Tax Act for furnishing inaccurate particulars of income. The firm claimed deduction under section 80IC at 100% for the assessment year 2009-10 due to substantial expansion, which was reduced to 25% by the Assessing Officer. The dispute centered on the interpretation of Section 80IC, with the appellant arguing that the claim was bona fide and not false.
2. The appellant contended that the claim was debatable and relied on various judicial decisions to support their argument. The authorities upheld the penalty, citing incorrect claim of exemption by the appellant. The appellant maintained that the claim was not concealed, and all income particulars were disclosed. The issue revolved around the interpretation of the law, specifically Section 80IC, for claiming deductions.
3. The Tribunal noted that the appellant's claim was supported by audit reports and past history, and it was the first time the claim was made in the 6th year of manufacturing activity. Despite the Tribunal's decision against the appellant on quantum, the claim for deduction under Section 80IC was considered valid. The Tribunal found the issue to be debatable, with pending appeals before the High Court on similar matters.
4. Citing the Supreme Court's decision in Reliance Petroproducts Pvt. Ltd., the Tribunal concluded that the appellant's claim, even if incorrect, did not amount to furnishing inaccurate particulars of income. The Tribunal emphasized that penalty imposition is not automatic and depends on the facts of each case. Since the appellant's claim had been allowed in previous years and there were no adverse judicial pronouncements against them, the penalty under section 271(1)(c) was deemed unwarranted. The Tribunal set aside the penalty orders and ruled in favor of the appellant.

In conclusion, the Tribunal allowed the appeal by the assessee, emphasizing that the claim for deduction under Section 80IC was made in good faith and did not constitute furnishing inaccurate particulars of income, leading to the cancellation of the penalty imposed under section 271(1)(c) of the Income Tax Act for the assessment year 2009-10.