2018 (1) TMI 1311 - HC - Income Tax

Penalty levied u/s 271(1)(c) - claim of deduction u/s 10B - Held that - Commissioner (Appeals) has categorically found that there was no concealment of facts by the assessee, to which the Tribunal has concurred. The assessee made a bonafide claim which was not accepted by the revenue. Therefore, in the absence of any concealment, merely because the assessee had made a claim under section 10B of the Act, the same would not attract penalty under section 271(1) (c) of the Act. Therefore, no infirmity can be found in the impugned order passed by the Tribunal in upholding the deletion of penalty under section 271(1)(c) of the Act. - Decided in favour of assessee

Summary

Issues:
Challenge to order cancelling penalty under section 271(1)(c) of the Income Tax Act, 1961.

Analysis:
1. The appellant revenue challenged the order of the Income Tax Appellate Tribunal cancelling the penalty under section 271(1)(c) of the Act for the assessment year 2009-10. The assessee company, engaged in knowledge process outsourcing, initially declared income but later filed a revised return claiming deduction under section 10B of the Act. The assessment disallowed the claim, leading to penalty proceedings and a subsequent deletion of penalty by the Commissioner, which was upheld by the Tribunal.

2. The appellant contended that the assessee furnished inaccurate particulars by falsely claiming deduction under section 10B without meeting the basic conditions. However, it was later revealed that the assessee was indeed registered with STPI, satisfying the conditions for deduction. The Commissioner found the claim to be bona fide, considering the circumstances and the reliance on the Supreme Court's decision in CIT v. Reliance Petro Products Private Limited.

3. The Tribunal agreed with the Commissioner's findings, emphasizing that the assessee acted in good faith and provided all relevant details. The Supreme Court's decision highlighted that mere claim rejection does not warrant a penalty under section 271(1)(c) if the details were accurately disclosed. As there was no concealment, the Tribunal upheld the deletion of the penalty, concluding that no substantial question of law arose, and the appeal was dismissed.

This detailed analysis of the judgment highlights the issues involved, the arguments presented by the appellant, the findings of the Commissioner and Tribunal, and the legal principles applied to uphold the deletion of the penalty under section 271(1)(c) of the Income Tax Act, 1961.