2018 (3) TMI 1346 - AT - Income Tax

Penalty proceedings u/s 271(1)(c) - deduction u/s 80HHC claimed - Held that - In the present case the assessee has claimed the deduction under Section 80HHC on this basis of a certificate issued by the C.A., whether it is right or wrong claim does not assert that the assessee has furnished inaccurate particulars of income or concealed the income. Thus, the present case is squarely covered by the Hon ble Apex Court decision and therefore, the appeal of the assessee is allowed.

Summary

Issues Involved:
1. Appeal against order of CIT(A) regarding penalty under section 271(l)(c) of the Income Tax Act.
2. Reopening of assessment proceedings after a significant delay.
3. Claiming deduction under section 80HHC and subsequent disallowance.
4. Allegations of concealment of income and imposition of penalty.

Issue 1: Appeal against CIT(A) order on penalty under section 271(l)(c):
The appellant challenged the order of CIT(A) upholding the penalty under section 271(l)(c) imposed by the Assessing Officer. The appellant argued that there was no concealment of income as they claimed deduction under section 80HHC in good faith based on legitimate documents. They contended that making an incorrect claim in law does not amount to furnishing inaccurate particulars. The Hon'ble Supreme Court's decision in CIT vs. Reliance Petroproducts Private Limited was cited to support this argument. The Tribunal, after considering the submissions, allowed the appeal, emphasizing that merely claiming an expenditure not accepted by the Revenue does not automatically lead to penalty under section 271(l)(c).

Issue 2: Reopening of assessment proceedings after a significant delay:
The assessment proceedings were reopened under section 147 of the Income Tax Act after a considerable delay of more than six years from the date of the original assessment. The appellant argued that such reopening was barred by limitation. The Tribunal noted that the initial assessment had accepted the deduction claimed under section 80HHC based on documents submitted by the appellant. The Tribunal held that the assessment being reopened after a significant delay was not permitted under the law, further supporting the appellant's case.

Issue 3: Claiming deduction under section 80HHC and subsequent disallowance:
The appellant had claimed a deduction under section 80HHC in their Return of Income. However, the Assessing Officer disallowed a portion of this deduction during the assessment proceedings, citing loss from business and restricting the deduction to the extent of profit declared by the assessee. The disallowance led to the initiation of penalty proceedings under section 271(l)(c). The Tribunal considered the validity of this disallowance in the context of the overall case.

Issue 4: Allegations of concealment of income and imposition of penalty:
The Assessing Officer imposed a penalty under section 271(l)(c) on the appellant, alleging concealment of income. The appellant contested this penalty, arguing that they had not concealed any income or particulars from the department. The Tribunal, referring to the decision of the Hon'ble Supreme Court, emphasized that the appellant had provided all details of income and expenditure in their Return, which were not found to be inaccurate. The Tribunal concluded that the penalty was not justified as the appellant's actions did not amount to concealment of income or furnishing inaccurate particulars.

In conclusion, the Tribunal allowed the appeal of the assessee, setting aside the penalty imposed under section 271(l)(c) and highlighting the importance of distinguishing between legitimate claims and deliberate concealment of income in tax matters.