2015 (8) TMI 1472 - AT - Income Tax

Penalty u/s 271(1)(c) - no positive income - Assessee contended that as the net result of the case of the assessee is a loss no penalty u/s 271(1)(c) is imposable - proof of bonafide mistake - claim of carry forward losses - findings as to the concealment of income or furnishing of inaccurate particulars - AO relying on the decision of CIT Vs. Gold Coin Health Food Pvt. Ltd. 2008 (8) TMI 5 - SUPREME COURT held that even it the returned income as well as assessed income are loss still penalty u/s 271(1)(c) is leviable - CIT(A) allowed the appeal of the assessee by deleting the penalty HELD THAT - This is a case where excess claim of carry forward losses was made by the assessee which was disallowed by the A.O. since it was not as per law. The assessee did not challenge the said order of the A.O. and accepted the said assessment. It is not a case of concealment of income as the AO himself has picked up all facts and figures from the return of income and the details filed by the assessee. It is not also a case of furnishing of inaccurate particulars as the assessee has disclosed all particulars rightly before the AO. It is a case where a excess claim was made by the assessee in its return. Every disallowance or addition made by AO could not be the sole basis for levying penalty u/s 271(1)(c). Assessee has pleaded bonafide which gets strengthened by the fact that the particulars of brought forward loss were declared to revenue and as per AO assessee could claim business losses of only eight years and assessee was dependent on legal advice only. The explanation offered by the assessee was therefore bonafide. It is a clear case of claim made by committing a bonafide mistake. The claim of carry forward losses is on account of an inadvertent & bonafide error and not intending to conceal income or to furnish inaccurate particulars of income. As this is a case of addition on account of excess claim made by the assessee penalty could not be levied under section 271 (1)(c) - Case of RELIANCE PETROPRODUCTS PVT. LTD. 2010 (3) TMI 80 - SUPREME COURT to be followed - Decided in favour of assessee.

Summary

Issues:
Appeal against deletion of penalty under section 271(1)(c) - Excess claim of carry forward losses disallowed by AO - Bonafide mistake in claim - Non-compliance as basis for penalty - Justification for penalty deletion.

Analysis:
The appeal before the Appellate Tribunal ITAT Chandigarh involved the deletion of a penalty under section 271(1)(c) by the CIT(A) in a case where the AO disallowed an excess claim of carry forward losses made by the assessee. The AO initiated penalty proceedings based on non-compliance by the assessee, citing the decision in the case of CIT vs. Gold Coin Health Food Pvt. Ltd. The CIT(A) considered the facts and arguments presented by the assessee, emphasizing that the excess loss claimed was due to a bonafide mistake and not an attempt to defraud the revenue. The CIT(A) held that the penalty was not justified as there was no concealment of income or furnishing of inaccurate particulars by the assessee.

In response to the Revenue's appeal, the Tribunal noted that the case involved a situation where the assessee had accepted the assessment order disallowing the excess claim of losses. The Tribunal observed that there was no concealment of income as all details were disclosed by the assessee, and it was not a case of furnishing inaccurate particulars. The Tribunal referred to the decision in Price Water House Cooper Pvt. Ltd. case, highlighting that inadvertent errors do not necessarily imply concealment or inaccurate particulars. The Tribunal also cited the judgment in the case of CIT Vs. Reliance Petro Products (P) Ltd., emphasizing that penalty cannot be imposed merely because a claim in the return is not accepted by the AO.

Ultimately, the Tribunal upheld the CIT(A)'s decision to delete the penalty under section 271(1)(c), stating that the AO had not provided any findings regarding concealment of income or inaccurate particulars, and had imposed the penalty solely based on non-compliance. The Tribunal concluded that the penalty was rightly deleted by the CIT(A) and dismissed the appeal filed by the Revenue.