2019 (7) TMI 699 - AT - Income Tax

Penalty u/s 271(1)(c) - disallowance of deduction u/s 80IA(4) - deduction was disallowed to the assessee on the ground that its industrial undertaking was not approved by the CBDT - HELD THAT - It appears that the assessee was prima facie of the view that its scheme would be approved and it will be entitled for deduction u/s 80IA(4). When the assessment proceedings were going on, its proposal was pending before the CBDT. This fact was in the knowledge of the department. As far as disallowance of the deduction claimed by the assessee in the quantum proceeding is concerned, since the assessee failed to fulfill the requisite condition that deduction has to be disallowed, but for the purpose of penalty, we have to ascertain whether a deliberate effort was made by the assessee for withholding such information or furnishing inaccurate particulars, which would lead to concealment of income. To our mind, the assessee has made a claim anticipating sanction of scheme by the CBDT and it has disclosed this fact during the course of assessment proceedings. It does not deserve to be visited with penalty in the above facts and circumstances. Therefore, we allow all three appeals of the assessee and delete the impugned penalty. - Decided in favour of assessee.

Summary

Issues:
Appeals against penalty under section 271(1)(c) of the Income Tax Act for Asstt. Years 2008-09, 2009-10, and 2010-11.

Analysis:
1. The appeals challenged the penalty imposed by the AO under section 271(1)(c) of the Income Tax Act. The grievance was that the ld.CIT(A) confirmed penalties of specific amounts for each assessment year.

2. The delay in filing the appeal for the Asstt. Year 2008-09 was explained due to the Chief Accountant's absence, leading to a minor delay of 10 days. The Tribunal condoned the delay and proceeded to hear the appeal on merit.

3. The core issue revolved around the claim of deduction under section 80IA of the Act for income from the development of an industrial park. The AO contended that the proposal was not accepted and notified by the CBDT, hence disallowing the deduction claimed by the assessee.

4. The assessee argued that it had filed the application and return based on the expectation of approval from the CBDT. The subsequent rejection by the CBDT was challenged in the Hon'ble Gujarat High Court, resulting in the approval of the application. The assessee maintained that there was no deliberate attempt to furnish inaccurate particulars or conceal income.

5. Section 271(1)(c) of the Income Tax Act was crucial in determining the penalty. The section allows for penalties if the assessee conceals income or furnishes inaccurate particulars. The penalty can range from 100% to 300% of the tax sought to be evaded.

6. The Tribunal analyzed the facts and concluded that the assessee had made the claim in anticipation of CBDT approval, disclosing the relevant details during assessment proceedings. As there was no deliberate attempt to conceal income, the penalty was deemed unwarranted, and all three appeals of the assessee were allowed.

7. The Judgment was pronounced on 9th July 2019 by the Appellate Tribunal ITAT Ahmedabad, with detailed reasoning provided for the decision to delete the penalties imposed by the AO under section 271(1)(c) for the respective assessment years.