2008 (4) TMI 27 - HC - Income Tax

Penalty under section 271(1)(C) for claiming excess deduction u/s 80IB (which was apparent on return) with allegation of furnishing inaccurate particulars and concealing particulars of income even if it is presumed that the counsel for the assessee made a bonafide mistake in calculation of such assessment years, still it can be said that no penalty should be imposed upon the assessee for the mistake of his counsel

Summary

Issues:
Appeal against deletion of penalty under Section 271(1)(c) of the Income Tax Act, 1961 for furnishing inaccurate particulars of income.

Analysis:
The case involved an appeal by the Revenue against the deletion of penalty under Section 271(1)(c) of the Income Tax Act, 1961. The assessee had initially filed a return of income for the assessment year 2003-04 declaring NIL income, claiming 100% deduction under Section 80 IB of the Act. Upon scrutiny, it was found that the company was entitled to only 30% deduction. The assessee admitted the mistake and revised the return, declaring income and claiming the correct deduction. The Assessing Officer imposed a penalty under Section 271(1)(c), which was challenged by the assessee and ultimately deleted by the CIT(A). The Revenue appealed to the Tribunal, arguing that the penalty was justified due to deliberate concealment of income. However, the Tribunal dismissed the appeal, stating that it was a case of a wrong claim under a mistaken belief rather than deliberate concealment.

The High Court considered the facts of the case, noting that the mistake in claiming the deduction was a bonafide error made by the Chartered Accountant of the assessee. The Court referred to the judgment in M/s Hindustan Steel Ltd. Vs. State of Orissa (1972) 83 ITR 26 (SC), which held that penalty is not imposable in the absence of a conscious breach of law. The Court further emphasized that since the dispute was regarding the calculation of the number of years for deduction under Section 80 IB, it could not be concluded that the assessee deliberately concealed income or furnished inaccurate particulars. The Court agreed with the Tribunal's finding that the Revenue failed to identify any specific defect in the CIT(A)'s conclusions.

In conclusion, the High Court upheld the Tribunal's decision, stating that no question of law arose in the appeal, and therefore dismissed the appeal by the Revenue. The Court found no grounds to interfere with the Tribunal's order, emphasizing that the mistake made by the assessee was a bonafide error and did not warrant the imposition of a penalty under Section 271(1)(c) of the Income Tax Act, 1961.