2018 (3) TMI 1765 - HC - Income Tax

Penalty u/s 271(1)(c) - making a claim relating to overdue interest - HELD THAT - Supreme Court in CIT v. Reliance Petro Products Pvt. Ltd. 2010 (3) TMI 80 - SUPREME COURT which held to the effect that mere making of a claim, which is not sustainable in law, would not amount to furnishing inaccurate particulars and observed that no infirmity was made out in the order of the Commissioner of Income Tax (Appeals), Visakhapatnam, holding to the effect that the levy of penalty was not warranted. No substantial question of law

Summary

Issues:
1. Appeal by Revenue under Section 260A of the Income-tax Act, 1961 challenging cancellation of penalty under Section 271(1)(c) for inaccurate particulars related to overdue interest claim.
2. Interpretation of the judgment in CIT v. Reliance Petro Products Pvt. Ltd. regarding the making of unsustainable claims.
3. Consideration of legal position on deduction claimed under Section 80P(2) of the Income-tax Act, 1961.
4. Analysis of whether making an unjustified claim constitutes furnishing inaccurate particulars for penalty under Section 271(1)(c).

Analysis:
The High Court addressed the appeal by the Revenue challenging the cancellation of penalty under Section 271(1)(c) of the Income-tax Act, 1961. The primary issue was whether the Tribunal was correct in law in canceling the penalty levied by the Assessing Officer for the concealment of inaccurate particulars related to an overdue interest claim. The Tribunal based its decision on the judgment in CIT v. Reliance Petro Products Pvt. Ltd., stating that making an unsustainable claim does not amount to furnishing inaccurate particulars. The Court noted that different Division Benches had ruled against the Revenue on similar issues in previous cases.

Regarding the deduction claimed under Section 80P(2) of the Income-tax Act, 1961, the Court referred to previous judgments where Division Benches had ruled against the Revenue. Additionally, the Court emphasized that the mere fact that an assessee made an unjustified claim does not constitute furnishing inaccurate particulars regarding income, which is necessary for levying a penalty under Section 271(1)(c) of the Act. The Court found that the legal position was well settled on all issues discussed in the case.

Consequently, the Court concluded that no substantial question of law arose for consideration in the appeal, and therefore dismissed the appeal. The judgment highlighted that the legal position was clear and there was no basis for challenging the Tribunal's decision. The Court made it clear that making an unjustified claim does not automatically lead to the imposition of a penalty for furnishing inaccurate particulars under the Income-tax Act, 1961.