2017 (3) TMI 1338 - HC - Income Tax

Penalty u/s 271(1)(c) - Held that - Claim made by Assessee which was not accepted by AO, that itself would not attract penalty under Section 271(1)(c) and if such an interpretation as forwarded by Revenue is accepted, whenever return filed by Assessee is not accepted, in all such cases Assessee would be liable for penalty under Section 271(1)(c) and that would render specific requirement of Section 271(1)(c) redundant, hence such an interpretation cannot be accepted. - Decided in favour of assessee.

Summary

Issues:
- Interpretation of Section 260A of the Income Tax Act, 1961
- Dismissal of departmental appeal by the Income Tax Appellate Tribunal
- Assessment of concealed income and penalty imposition under Section 271(1)(c) of the Act

Analysis:
1. The case involved an appeal under Section 260A of the Income Tax Act, 1961, arising from a judgment by the Income Tax Appellate Tribunal. The substantial questions of law raised included the justification of dismissing the departmental appeal regarding the provision for gratuity and the treatment of disallowed amounts as concealed income.

2. The Assessee, a construction company, filed its return of income claiming depreciation, which was assessed by the AO resulting in additions and disallowances. The Tribunal confirmed certain disallowances, leading to a penalty imposition under Section 271(1)(c) for alleged concealment of income.

3. The Tribunal's order focused on the nature of disallowances and the requirement to establish concealment of particulars of income or inaccurate particulars. The Tribunal emphasized that incorrect claims for expenditure do not necessarily constitute inaccurate particulars, as clarified in various judicial precedents.

4. Referring to the Supreme Court's interpretation in Commissioner of Income Tax Vs. Reliance Petroproducts Pvt. Ltd., the Tribunal highlighted that mere incorrect claims in law do not amount to furnishing inaccurate particulars. The Tribunal concluded that the Assessee's claims, though not accepted by the AO, did not attract penalties under Section 271(1)(c).

5. The Tribunal dismissed the Revenue's appeal, stating that the judgments cited by the Revenue did not establish a different legal position. Consequently, the Tribunal upheld the order dismissing the appeal of the Revenue and found in favor of the Assessee.

6. Ultimately, the Tribunal ruled against the appellant, affirming the correctness of the Tribunal's order in dismissing the appeal. The judgment emphasized the necessity to establish concealment of income or inaccurate particulars for penalty imposition under Section 271(1)(c) and clarified the interpretation of the relevant legal provisions.

7. In conclusion, the appeal was dismissed, and the Tribunal's decision was upheld, emphasizing the importance of accurately determining the presence of concealed income or inaccurate particulars for penalty imposition under the Income Tax Act, 1961.