2016 (10) TMI 631 - HC - Income Tax

Penalty levied u/s 271(1)(c) - concealment of particulars of income - Held that - None of the Authorities under the Act have held that there was any concealment of particulars of income or that the details supplied by the respondent assessee were incorrect / erroneous / false while making a claim of a revenue expenditure while making a payment to National Pharmaceutical Pricing Authority. The Apex Court in Commissioner of Income Tax Vs. Reliance Petroproducts Pvt. Ltd., 2010 (3) TMI 80 - SUPREME COURT , has held that mere making of a incorrect claim by itself would not warrant any imposition of penalty. The sine qua non for imposition of penalty would be suppressing details and / or supplying erroneous / false details. A mere making of a claim which may be found on examination to be not sustainable in law by itself will not amount to furnishing inaccurate particulars of the assessee s income. Moreover, in the facts of this case even a merits of the claim made in quantum proceedings is debatable. This is evident from the fact that the Tribunal in quantum proceedings upheld the claim made by the respondent assessee. - Decided in favour of assessee

Summary

Issues:
1. Challenge to the order of the Income Tax Appellate Tribunal directing the deletion of penalty under Section 271(1)(c) of the Income Tax Act.

Analysis:

Issue 1: Challenge to the Tribunal's order regarding penalty deletion
The High Court dealt with the appeal challenging the Tribunal's order dated 28th June, 2013, which upheld the deletion of penalty imposed by the Assessing Officer under Section 271(1)(c) of the Act for Assessment Year 1999-2000. The Tribunal dismissed the Revenue's appeal based on the respondent assessee's claim that the payment made to the National Pharmaceutical Price Authority was revenue in nature. The High Court noted that none of the authorities under the Act found any concealment of income particulars or incorrect details supplied by the assessee regarding the revenue expenditure claim. Citing the case of Commissioner of Income Tax Vs. Reliance Petroproducts Pvt. Ltd., the High Court emphasized that a mere incorrect claim does not automatically lead to a penalty unless there is a deliberate act of suppressing or providing false details. The High Court observed that the Tribunal's decision aligned with the principles laid down by the Apex Court, and even if the claim's merits were debatable, it did not amount to furnishing inaccurate particulars of income. Consequently, the High Court dismissed the appeal, stating that the question raised did not give rise to any substantial question of law.

In conclusion, the High Court upheld the Tribunal's decision to delete the penalty imposed under Section 271(1)(c) of the Income Tax Act, emphasizing that the mere debatability of a claim in quantum proceedings does not automatically warrant a penalty if there is no deliberate concealment or provision of false information. The judgment highlighted the importance of distinguishing between incorrect claims and deliberate misrepresentation while determining the imposition of penalties under the Act.