2021 (1) TMI 292 - AT - Income Tax

Penalty u/s 271(1)(c) - allegation that, assessee making incorrect claim of deduction u/s 80P thus furnishing of inaccurate particulars of income - HELD THAT - We observe that similar issue under identical facts has came up before this Tribunal in assessee s own case for Assessment Year 2011-12 and revenue s appeal was dismissed and the finding of Ld. CIT(A) deleting the penalty levied u/s 271(1)(c) held that bona fide of the assessee in claiming the deduction cannot be disputed and therefore, the penalty imposed should be cancelled. In this situation, we are inclined to hold that since appeal of the assessee on this issue which is pending for decision before Hon'ble High Court till disposal of such appeal bona fide in claiming deduction u/s. 80P of the Act cannot be ruled out and hence penalty u/s 271(1)(c) of the Act cannot be sustained and only on this count penalty deserves to be deleted. Decided against revenue.

Summary

Issues:
Appeal against penalty under section 271(1)(c) of the Income Tax Act, 1961 for Assessment Year 2009-10.

Analysis:
1. The appeal filed by the revenue challenges the order of the Commissioner of Income Tax (Appeals)-2 (Ld.CIT), Bhopal, against the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961. The penalty was imposed by the Assessing Officer (A.O) due to disallowance of deduction under section 80P of the Act in the assessment proceedings for the year 2009-10.

2. The Ld. CIT(A) deleted the penalty, citing that the issue was similar to the appellant's case for A.Y. 2011-12, where the High Court admitted the appeal on substantial questions of law. The Ld. CIT(A) also referred to a decision of the ITAT, Indore Bench, stating that when there is an admission of High Court regarding penalty, the penalty cannot be imposed.

3. The Tribunal considered the arguments of both parties, noting that a similar issue had been decided in favor of the assessee for A.Y. 2011-12. The Tribunal observed that until the High Court decides on the issue of deduction under section 80P for A.Y. 2007-08, the bona fide of the assessee in claiming the deduction cannot be disputed. Therefore, the penalty imposed under section 271(1)(c) was deemed unsustainable and was ordered to be deleted.

4. The Tribunal found that the issue in the current appeal was covered by its decision in the assessee's case for A.Y. 2011-12. The Departmental Representative failed to present any contrary judgments. Thus, the Tribunal upheld the decision of the Ld. CIT(A) in deleting the penalty under section 271(1)(c) of the Act.

5. In conclusion, the Tribunal dismissed the revenue's appeal against the penalty imposed, based on the consistent application of law and the pending decision of the High Court on the issue of deduction under section 80P. The Tribunal's decision was in line with the principle that the bona fide of the assessee in claiming the deduction should be respected until the High Court's final decision.