2016 (9) TMI 2 - AT - Income Tax

Penalty u/s 271(1)(c ) - claim u/s 35D - Held that - As find from the record that the assessee has made claim u/s 35D of the Act which was reduced during the course of assessment proceedings when the assessee filed revised calculation u/s 35D and thus the difference of ₹ 5,35,279/- was added to the income of the assessee. We find that the claim of the assessee was also certified by the Chartered Accountant of the assessee and find merit in the submissions of the ld. AR that it was claimed under bonafide belief. The case of the assessee find strong support from number of decisions as placed before the Bench during the course hearing. Thus direct the AO to delete the penalty. - Decided in favour of assessee

Summary

Issues involved:
Confirmation of penalty under section 271(1)(c) of the Income Tax Act, 1961 based on inaccurate claim u/s 35D.

Analysis:

1. Issue of Penalty Confirmation:
The appeal was filed against the penalty of ?1,65,401 imposed by the Assessing Officer (AO) under section 271(1)(c) of the Income Tax Act, 1961. The AO found that the assessee had debited an amount under section 35D of the Act, which was later revised by the assessee during the assessment proceedings. Despite the revision, the AO imposed the penalty, alleging that the assessee furnished inaccurate particulars of income. The CIT(A) upheld the penalty, relying on the decision of the Hon'ble Apex Court in the case of MAK Data Limited. The assessee contended that the penalty was wrongly imposed as the claim was revised under bonafide belief and certified by the Chartered Accountant. The AR highlighted various decisions, including Price Waterhouse Coopers Pvt. Ltd and Reliance Petroproducts Pvt. Ltd cases, to support the contention that the penalty was not justified.

2. Judicial Precedents and Legal Interpretation:
The Tribunal analyzed the legal precedents cited by the parties. In the Price Waterhouse Coopers Pvt. Ltd case, the Supreme Court emphasized that inadvertent errors made in returns do not amount to concealment of income or furnishing inaccurate particulars. Similarly, in the Reliance Petroproducts Pvt. Ltd case, it was clarified that incorrect claims in law do not constitute furnishing inaccurate particulars unless the conditions under section 271(1)(c) are met. The Tribunal found merit in the arguments presented by the assessee, stating that the claim was made under bonafide belief and that no inaccurate particulars were furnished. The Tribunal, therefore, set aside the order of the CIT(A) and directed the AO to delete the penalty.

3. Decision and Conclusion:
After considering the submissions, legal precedents, and facts of the case, the Tribunal allowed the appeal of the assessee. The Tribunal concluded that the penalty imposed on the assessee was not justified as the claim was made under bonafide belief and there was no intention to conceal income or furnish inaccurate particulars. By relying on the legal interpretations provided in the cited cases, the Tribunal held that the penalty under section 271(1)(c) should not be invoked in this scenario.

In summary, the Tribunal ruled in favor of the assessee, emphasizing that inadvertent errors in claims do not warrant the imposition of penalties under section 271(1)(c) of the Income Tax Act, 1961. The decision was based on legal precedents highlighting the distinction between genuine mistakes and deliberate attempts to conceal income or furnish inaccurate particulars.