2016 (5) TMI 626 - AT - Income Tax

Penalty u/s. 271(1)(c) - no allowability of claim of expenses - Held that - Where the difference between the assessee and the Revenue is merely on account of difference in the year of allowability of claim, and in the absence of any finding or doubt with regard to the genuineness of the expenses claimed, the penal provisions of Sec. 271(1)(c) of the Act are not attracted. In our considered opinion, the aforesaid proposition clearly covers the instant case and the penalty levied u/s. 271(1)(c) of the Act deserves to be deleted. Apart therefrom, on the issue of uniformity of approach, it has also been established by the appellant that similar disallowance made in the Assessment Years 2006-07 and 2008-09 have not resulted in levy of penalty by the Assessing Officer itself. This fact-situation also justifies the assertion of the assessee that the impugned penalty deserves to be set-aside, and we do so. - Decided in favour of assessee

Summary

Issues:
Penalty under section 271(1)(c) of the Income Tax Act, 1961 for alleged concealment of income or furnishing inaccurate particulars.

Detailed Analysis:

1. Background and Disputed Issue:
The appeal challenges the penalty of &8377; 1,19,31,643/- imposed under section 271(1)(c) of the Income Tax Act, 1961 by the Assessing Officer. The dispute arises from the disallowance of &8377; 3,54,47,542/- claimed as advertisement/sales promotion expenses by the assessee for the Assessment Year 2007-08. The Assessing Officer alleged that the assessee filed inaccurate particulars of income, leading to the penalty.

2. Assessee's Contentions:
The representative for the assessee argued that the claim for deduction of expenses was consistent with past practices and accepted by the Revenue until Assessment Year 2005-06. The representative highlighted that the disagreement arose for the first time in Assessment Year 2006-07, and no penalty was levied that year. The assessee contended that the penalty was unjustified as there was no deliberate attempt to furnish inaccurate particulars of income.

3. Revenue's Defense:
The Department defended the penalty by asserting that the claimed expenses were not related to the income of the current year but to upcoming projects. It contended that the assessee wrongly claimed the expenses against the current year's income, justifying the penalty under section 271(1)(c) of the Act.

4. Tribunal's Decision:
The Tribunal analyzed the facts and legal provisions. It noted that the dispute was primarily about the timing of allowance of expenses, not their genuineness. The Tribunal observed that the inconsistency in the Revenue's approach and the lack of doubt on the genuineness of the expenses favored the assessee. Relying on legal precedents, including the Supreme Court's judgment in Reliance Petroproducts Pvt. Ltd., the Tribunal concluded that no deliberate attempt to furnish inaccurate particulars was evident. Consequently, the Tribunal set aside the penalty imposed under section 271(1)(c) of the Act.

5. Final Decision:
The Tribunal allowed the appeal, directing the Assessing Officer to delete the penalty of &8377; 1,19,31,643/- imposed on the assessee under section 271(1)(c) of the Income Tax Act, 1961. The decision was based on the lack of evidence supporting deliberate concealment or furnishing of inaccurate particulars of income by the assessee.

This detailed analysis highlights the key arguments, findings, and legal principles considered by the Tribunal in reaching its decision to set aside the penalty imposed on the assessee.