2022 (1) TMI 1093 - AT - Income Tax

Penalty u/s. 271(1)(c) - AO disallowed the excess claim of deduction u/s. 36(1)(viia) on the ground that the assessee had not created the requisite provision - As argued AO was not able to prove that is a fit case for imposition of penalty either under the main part of section u/s. 271(1)(c) or under the deeming provisions of explanation 1 to section 271(1)(c) - HELD THAT - On perusal of the assessment order, it will clearly suggest that, it is a case of mere disallowance of excess claim for want of creation of requisite provision which, in our considered opinion, does not tantamount to furnishing inaccurate particulars of income, nor can it be said that it is false claim. Therefore, the ratio of decision in the case of Reliance Petro Products Pvt. Ltd. 2010 (3) TMI 80 - SUPREME COURT is squarely applicable to the facts of the present case. Also on perusal of the assessment order, it will clearly suggest that, it is a case of mere disallowance of excess claim for want of creation of requisite provision which, in our considered opinion, does not tantamount to furnishing inaccurate particulars of income, nor can it be said that it is false claim. Therefore, the ratio of decision of the Hon'ble Apex Court in the case of Reliance Petro Products Pvt. Ltd. (supra) is squarely applicable to the facts of the present case - no fallacy and illegality in the order of the Ld. CIT(A) deleting the penalty u/s 271(1)(c) - Decided in favour of assessee.

Summary

Issues:
Appeal against deletion of penalty u/s. 271(1)(c) - Assessment year 2009-10.

Analysis:
1. The appeal was filed by the Revenue against the order of the ld. Commissioner of Income Tax (Appeals) for the assessment year 2009-10. The Revenue raised grounds challenging the deletion of the penalty of ?59,00,884/- imposed under section 271(1)(c) of the Income Tax Act, claiming that the Assessing Officer was not able to prove the case for penalty imposition under the main part or explanation 1 to section 271(1)(c) of the Act.

2. The facts of the case involved a cooperative bank engaged in banking business, which had filed a return of income for the assessment year 2009-10. The Assessing Officer disallowed a claim for deduction u/s. 36(1)(viia) resulting in a total income of ?6,29,04,510/-. The ld. CIT(A) and the Tribunal confirmed this disallowance. Subsequently, the Assessing Officer levied a penalty under section 271(1)(c) for furnishing inaccurate particulars of income.

3. The ld. CIT(A) held that the penalty was not imposable, citing the Supreme Court's decision in CIT vs. Reliance Petro Products Pvt. Ltd., emphasizing that mere disallowance of a claim does not warrant a penalty under section 271(1)(c). The Revenue challenged this decision, arguing that the excess claim of deduction itself indicated inaccurate particulars of income.

4. The Tribunal analyzed the case and found that the disallowance of the excess claim did not amount to furnishing inaccurate particulars of income or a false claim. The Tribunal noted that there was no finding by the Assessing Officer on how the inaccurate particulars were furnished. Citing various precedents, the Tribunal concluded that the penalty could not be sustained without evidence of inaccurate particulars.

5. Consequently, the Tribunal dismissed the Revenue's appeal, upholding the decision of the ld. CIT(A) to delete the penalty of ?59,00,884/- imposed under section 271(1)(c) of the Act for the assessment year 2009-10. The Tribunal found no fallacy or illegality in the ld. CIT(A)'s decision, and the appeal filed by the Revenue was dismissed.

In conclusion, the Tribunal's detailed analysis focused on the interpretation of inaccurate particulars of income and the applicability of penalties under section 271(1)(c) in cases of disallowed claims. The decision underscored the necessity of concrete evidence to support penalty imposition, emphasizing the importance of findings by the Assessing Officer in such matters.