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2022 (7) TMI 813 - AT - Income TaxPenalty u/s 271(1)(c) - disallowance of claim for deduction u/s 36(1)(viia) - As per DR assessee bank made wrong claim deliberately knowing that it was not entitled for deduction u/s 36(1)(viia) for the assessment year prior to A.Y. 2007-08 making assessee clearly guilty of furnishing of inaccurate particulars of income - HELD THAT - On perusal of the assessment order it would reveal that the claim made for deduction u/s 36(1)(viia) was disallowed by the AO on the ground that co-operative banks were entitled to claim deduction only from assessment year 2007-08 and not for years prior to assessment year 2007-08. Thus it is a case of mere disallowance of claim under particular section of the Act there is no finding by the AO as to what particulars filed by the assessee and found to be inaccurate. It is settled position of law that mere disallowance of claim on legal ground does not entail levy of penalty under the provisions of section 271(1)(c) of the Act as laid down by the Hon ble Supreme Court in the case of CIT vs. Reliance Petroproduct (P) Ltd. 2010 (3) TMI 80 - SUPREME COURT - Decided in favour of assessee.
Issues Involved:
- Appeals filed by Revenue against orders of Commissioner of Income Tax (Appeals) for different assessment years. - Disallowance of claim for deduction u/s 36(1)(viia) and subsequent penalty proceedings under section 271(1)(c) of the Act. - Application of legal precedent regarding levy of penalty for inaccurate particulars of income. Analysis: Issue 1: Appeals filed by Revenue The Appellate Tribunal ITAT Pune addressed five appeals filed by the Revenue against orders of the Commissioner of Income Tax (Appeals) for different assessment years (2004-05, 2009-10, 2011-12, 2012-13, and 2008-09). As the facts and issues were identical in all appeals, the Tribunal proceeded to dispose of them through a common order. Issue 2: Disallowance of claim for deduction u/s 36(1)(viia) and Penalty Proceedings The respondent, a cooperative bank, filed a return of income for the assessment year 2004-05, declaring a loss. The Assessing Officer disallowed certain deductions leading to a penalty under section 271(1)(c) of the Act. The Commissioner of Income Tax (Appeals) deleted the penalty, citing legal precedents that a mere disallowance of a claim does not warrant a penalty. The Tribunal concurred, emphasizing that the disallowance was based on a legal ground and did not involve inaccurate particulars of income. The Tribunal cited the decision of the Hon'ble Supreme Court to support its conclusion. Issue 3: Application of Legal Precedent The Tribunal referred to the decision of the Hon'ble Supreme Court in CIT vs. Reliance Petroproduct (P) Ltd. and Price Waterhouse Coopers Pvt. Ltd., highlighting that a claim made in the return, even if not sustainable in law, does not amount to furnishing inaccurate particulars regarding the income of the assessee. The Tribunal upheld the CIT(A)'s decision, stating that the mere disallowance of a claim on a legal ground does not attract a penalty under section 271(1)(c) of the Act. The Tribunal dismissed the appeals filed by the Revenue, applying the legal principles established by the Supreme Court. In conclusion, the Appellate Tribunal ITAT Pune dismissed all appeals of the Revenue, emphasizing that a mere disallowance of a claim on a legal ground does not warrant a penalty under section 271(1)(c) of the Income Tax Act. The Tribunal's decision was based on the application of legal precedents and the absence of inaccurate particulars of income in the case at hand.
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