2011 (3) TMI 1783 - AT - Income Tax

Summary

Issues involved: Deletion of penalty u/s 271(1)(c) of the Income Tax Act, 1961.

The judgment pertains to an appeal by the Revenue against the order of CIT(A)-II, Ludhiana related to the assessment year 2005-06 concerning the penalty imposed u/s 271(1)(c) of the Income Tax Act, 1961. The main issue raised in the appeal is the deletion of the penalty levied u/s 271(1)(c) of the Act. The penalty was imposed due to the disallowance of a claim of deduction u/s 80IB of the Act, based on the exclusion of certain amounts by the Assessing Officer. The CIT(A) deleted the penalty relying on previous appellate orders and the ratio laid down by the Hon'ble Supreme Court in CIT v Reliance Petro Products Ltd [322 ITR 158 (SC)]. The Revenue appealed against this decision.

The Tribunal reviewed the facts and previous orders related to the issue. It was noted that the penalty u/s 271(1)(c) of the Act was imposed on the grounds of furnishing inaccurate particulars of income by claiming excess deduction u/s 80IB of the Act. The Tribunal referred to previous cases and judgments to analyze the situation. It was observed that the claim made by the assessee was not willfully wrong and was based on bonafide considerations. The Tribunal upheld the order of the CIT(A) in deleting the penalty, citing the proposition by the Hon'ble Supreme Court that merely making an incorrect claim does not amount to concealment of income.

Another plea raised by the assessee was that the claim of deduction u/s 80IB was made based on certificates issued by a Chartered Accountant, indicating a bonafide claim not warranting the penalty u/s 271(1)(c) of the Act. This plea was upheld by the Tribunal, following the jurisdictional High Court's ruling in CIT Vs. S.D. Rice Mills [275 ITR 206 (P&H)]. Consequently, the appeal of the Revenue was dismissed, affirming the decision to delete the penalty.

In conclusion, the Tribunal upheld the deletion of the penalty u/s 271(1)(c) of the Act based on the bonafide nature of the claim and the absence of willful misconduct in furnishing inaccurate particulars of income. The decision was in line with previous judicial interpretations and rulings, leading to the dismissal of the Revenue's appeal.