2017 (4) TMI 1144 - AT - Income Tax

Penalty levied under Section 271(1)(c) - claiming deduction under Section 10A and 10B - selection of assessment year - Held that - It is not a case of unearthing the income during the course of search or survey proceeding. The assessee claimed deduction under Section 10B of the Act by furnishing all the particulars of income. Claim under Section 10B of the Act is a statutory claim under the scheme of Income-tax Act. The Assessing Officer found that the manufacturing activity of the assessee was commenced from the assessment year 2000-01. Therefore, the assessee, at the best, can make claim under Section 10B of the Act from the assessment year 2000-01 to 2009-10. The Assessing Officer has also found that the assessee obtained approval as 100% Export Oriented Unit on 16.03.2005. Therefore, the assessee can claim only from assessment year 2005-06 till 2009-10. The assessee s main contention is that there are two amendments to Section 10B of the Act one made in the year 2008 and another in the year 2009. It is not in dispute that the Sunset Clause for exemption was extended. In view of the confusion in the mind of taxpayer and officers, the CBDT also clarified by issuing circular. Therefore, it is a case of misunderstanding the statutory provision by the assessee and the officers. The assessee understood the provision of exemption under Section 10B of the Act in a particular manner and the Assessing Officer has understood the same in another manner. There was a real confusion as stated above in view of extension of Sunset Clause and amendment made in Finance Act, 2008 and 2009. Therefore, the claim made by the assessee being a bona fide one, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly deleted the penalty levied by the Assessing Officer. As found by the Apex Court in Reliance Petroproducts (P.) Ltd. (2010 (3) TMI 80 - SUPREME COURT) mere making a claim under Section 10B of the Act after furnishing all the particulars of income, cannot be a reason for concluding that the assessee has furnished inaccurate particulars or concealed any part of income. - Decided in favour of assessee

Summary

Issues:
- Appeal against deletion of penalty under Section 271(1)(c) of the Income-tax Act, 1961 for assessment year 2011-12 regarding deduction under Section 10B.

Analysis:
1. The Revenue contended that the assessee wrongly claimed deduction under Section 10B of the Act for the assessment year 2011-12, which was disallowed by the Assessing Officer leading to the imposition of penalty under Section 271(1)(c). The CIT(Appeals) deleted the penalty, prompting the Revenue to appeal. The Revenue argued that the assessee accepted the mistake during assessment proceedings, indicating no inaccurate particulars were filed, thus penalty should stand based on precedents like Mak Data P. Ltd. v. CIT and CIT v. Zoom Communication (P.) Ltd.

2. The assessee, represented by counsel, claimed that the misunderstanding arose due to amendments in the Finance Act, 2009, extending the Sunset Clause for deduction under Section 10B. The assessee withdrew the claim after realizing the error, maintaining that all income details were accurately disclosed. The counsel argued that the claim was made in good faith, citing the judgment in CIT v. Reliance Petroproducts (P.) Ltd. to support the deletion of the penalty.

3. The Tribunal analyzed the case, distinguishing it from precedents like Mak Data P. Ltd., where income was unearthed during search proceedings. In this case, the assessee's claim under Section 10B was based on a genuine misunderstanding of the law due to conflicting interpretations. Referring to the CBDT circular and amendments to Section 10B, the Tribunal found the confusion legitimate, aligning with the judgment in Reliance Petroproducts (P.) Ltd. The Tribunal upheld the CIT(Appeals)' decision, emphasizing that a bona fide claim, even if incorrect, does not constitute furnishing inaccurate particulars or concealing income.

4. Citing the Delhi High Court's observation in Zoom Communication (P.) Ltd., the Tribunal reiterated the importance of a bona fide claim, stating that incorrect claims made in good faith do not attract penalties under Section 271(1)(c). The Tribunal concluded that the penalty deletion by the CIT(Appeals) was justified, as the assessee's claim under Section 10B was made in good faith, considering the confusion caused by legislative changes and clarifications. Consequently, the Tribunal dismissed the Revenue's appeal, confirming the lower authority's decision.

This detailed analysis of the judgment highlights the conflicting interpretations of the law, the genuine misunderstanding leading to the claim, and the legal precedents supporting the deletion of the penalty under Section 271(1)(c) in the context of deduction under Section 10B of the Income-tax Act, 1961 for the assessment year 2011-12.