2016 (11) TMI 457 - HC - Income Tax

Penalty u/s 271(1)(C) - Surrender of a claim - amnesty to the assessee against the penalty - whether there been no scrutiny in the case, there would have been no question of any surrender by the assessee? - Held that - There is no allegation on record which suggests that the assessee had made any incorrect, erroneous or false details in his returns, which would result in invitation of the penalty under section 271(1)(C) of the Act. The court below have recorded that no inaccurate particulars were furnished by the assessee and the penalty has been deleted on account of the fact that the provision of section 271((1)(C) of the Act were not attracted in the case. - Decided in favour of assessee

Summary

Issues Involved:
Income tax appeal under section 260A against penalty imposed under section 271(1)(C) for assessment year 2003-04.

Analysis:
The case involved an income tax appeal filed by the revenue against an order passed by the tribunal for the assessment year 2003-04, questioning the imposition of penalty under section 271(1)(C) of the Income Tax Act, 1961. The main issue raised was whether the surrender of a claim by the assessee provided any amnesty against the penalty, especially in a scenario where there was no scrutiny by the assessing officer. The facts revealed that the assessee, a partnership firm engaged in manufacturing and export, had filed its income tax return declaring a total taxable income. The assessment was completed, and penalty proceedings were initiated under section 271(1)(C) against the assessee.

The Commissioner of Income Tax (Appeals) deleted the penalty imposed by the assessing officer, emphasizing that there was no failure on the part of the assessee to conceal or furnish inaccurate income particulars. The tribunal upheld this decision, citing the debatable issue of deductions under sections 80IB and 80HHC, which was resolved by a Supreme Court judgment. The revenue contended that the surrender of a sum by the assessee did not absolve them from penalty proceedings, but the court noted that there was no evidence of incorrect or false details in the assessee's returns justifying the penalty under section 271(1)(C).

The court referenced the Apex Court's ruling in a similar case, emphasizing that the mere making of an unsustainable claim does not amount to furnishing inaccurate income particulars. The court concurred with the tribunal's findings that no inaccurate particulars were provided by the assessee, leading to the deletion of the penalty. Ultimately, the court dismissed the appeal, ruling in favor of the assessee and against the revenue. The judgment highlighted that the penalty provision was not attracted in this case due to the absence of any incorrect or false details in the assessee's returns.