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2020 (8) TMI 165 - AT - Income TaxPenalty u/s 271(1) - addition of wrong claim u/s 80IB made by assessee in the return surrendered during scrutiny proceedings - whether the claim made by the assessee is a bonafied mistake or a deliberate attempt made to conceal the particulars of income within the meaning of section 271(1)(c) has to be examined? - HELD THAT - On perusal of the reasons given by the assessee for making a claim of deduction u/s 80IB(4), we find that the assessee was prompted to go for making a claim as per the report of auditor given in Form 10CCB, which is in our considered view is a bonafied mistake and the same cannot be considered as a deliberate attempt made for concealment of particulars of income to levy penalty u/s 271(1)(c). We, further noted that in the case of CIT vs Reliance Petro chemicals products Pvt. Ltd. 2010 (3) TMI 80 - SUPREME COURT has held that making a claim, which is not substantiated cannot be considered as deliberate attempt to concealment of particulars of income, which warrants levy of penalty u/s 271(1)(c) Similar view has been expressed of CIT vs Price Waterhouse Coopers 2012 (9) TMI 775 - SUPREME COURT where the assessee has made a claim on the basis of tax audit report of auditor and the same has been found to be not allowed and the Ld. AO has made additions - mere making a claim, which is not substantiated that too on the basis of report of auditor cannot be considered as concealment of particulars of income. In this case, there is no doubt of whatsoever with regard to the claim of the assessee towards trading profit and such claim is solely based on the report of auditor in Form No. 10CCB. Claim made by the assessee towards deduction u/s 80IB(4) is a bonafied mistakes, for which the penalty provisions provided u/s 271(1)(c) cannot be invited. - Decided in favour of assessee.
Issues:
Penalty under section 271(1)(c) for wrong claim under section 80IB of the Income Tax Act, 1961. Detailed Analysis: 1. Background and Grounds of Appeal: The appeal was filed against the order of the Ld. Commissioner of Income tax (Appeals)-20, Mumbai, concerning the assessment year 2007-08. The assessee raised two main grounds of appeal related to the penalty imposed under section 271(1)(c) for the wrong claim made under section 80IB of the Income Tax Act, 1961. 2. Facts of the Case: The assessee had initially claimed a deduction under section 80IB(4) in the return of income for the assessment year 2007-08. However, the Ld. AO disallowed a portion of this claim during assessment. Subsequently, penalty proceedings were initiated under section 271(1)(c) by the Ld. AO, resulting in the imposition of a penalty equivalent to 100% of the tax sought to be evaded. 3. Arguments Before the CIT(A): The assessee contended that the mere claim of deduction under section 80IB(4), which was not allowed or substantiated, should not be considered as concealment of income or furnishing inaccurate particulars warranting a penalty under section 271(1)(c). The Ld. CIT(A), however, confirmed the penalty on the wrong claim of deduction related to trading profit but deleted the penalty on the excess claim related to DEPB/export incentives. 4. Decision of the ITAT: The ITAT analyzed the case and found that the claim made by the assessee for deduction under section 80IB(4) based on the auditor's report was a bona fide mistake and not a deliberate attempt to conceal income. Referring to relevant case laws, including the decisions of the Hon'ble Supreme Court, the ITAT concluded that the penalty provisions under section 271(1)(c) should not apply in this scenario. Therefore, the ITAT directed the Ld. AO to delete the penalty levied under section 271(1)(c) concerning the disallowance of deductions claimed under section 80IB(4) related to trading profit. 5. Final Verdict: Consequently, the appeal filed by the assessee was allowed, and the penalty under section 271(1)(c) was directed to be deleted in respect of the disallowed deductions claimed under section 80IB(4) for trading profit. This detailed analysis highlights the key arguments, decisions, and legal principles applied in the judgment related to the penalty imposed for a wrong claim under section 80IB of the Income Tax Act, 1961.
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