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2022 (10) TMI 1098 - AT - Income TaxLevy of penalty u/s 271(1)(c) - addition made on account of disallowance of loss incurred on derivatives - HELD THAT - It is a case of disallowance of a claim by Assessing Officer, which does not tantamount furnishing inaccurate particulars of income or concealment of particulars of income as held by the Hon ble Supreme Court in the case of CIT vs. Reliance Petroproducts Pvt. Ltd. 2010 (3) TMI 80 - SUPREME COURT Thus it cannot be said that the respondent-assessee is guilty of furnishing of inaccurate particulars of income or concealing particulars of income. Therefore, it is not a fit case for levy of penalty u/s 271(1)(c) of the Act. - Decided in favour of assessee.
Issues Involved:
Appeals filed by Revenue against CIT(A) orders for assessment years 2010-11 and 2011-12 - Disallowance of deduction u/s 80-IC, disallowance of derivative loss, levy of penalty u/s 271(1)(c) - Quashing of penalty proceedings by CIT(A) based on satisfaction recording - Interpretation of inaccurate particulars of income or concealment of particulars of income - Applicability of Supreme Court's decision in CIT vs. Reliance Petroproducts Pvt. Ltd. Analysis: Issue 1: Disallowance of Deduction u/s 80-IC and Derivative Loss: - The respondent-assessee, engaged in various businesses, filed revised income return post search and seizure operations. - Assessing Officer disallowed deduction u/s 80-IC and derivative loss on foreign currency loan for plant and machinery purchase. - CIT(A) confirmed certain additions, including derivative loss, which was later deleted by ITAT. - However, ITAT confirmed derivative loss disallowance. - Subsequently, penalty u/s 271(1)(c) was levied by AO. - CIT(A) quashed the penalty citing lack of satisfaction recording in assessment order. - Revenue appealed against CIT(A) order on penalty levy. Issue 2: Levy of Penalty u/s 271(1)(c): - The crux of the issue was whether the respondent-assessee furnished inaccurate particulars of income or concealed income. - The Supreme Court's decision in CIT vs. Reliance Petroproducts Pvt. Ltd. was pivotal in determining the penalty applicability. - The Court held that merely making incorrect claims in law does not amount to furnishing inaccurate particulars. - The case did not involve concealment or furnishing of inaccurate particulars, as no incorrect information was provided in the return. - The Revenue's argument of excessive deductions leading to concealment was dismissed. - The Tribunal found that the respondent-assessee did not furnish inaccurate particulars or conceal income, hence penalty u/s 271(1)(c) was not justified. Final Decision: - The Tribunal dismissed the Revenue's appeal against CIT(A)'s order quashing the penalty proceedings. - The decision was based on the Supreme Court's interpretation of inaccurate particulars of income or concealment. - Both appeals by the Revenue for assessment years 2010-11 and 2011-12 were dismissed based on the above analysis. This detailed analysis provides a comprehensive understanding of the legal judgment involving various issues related to the disallowance of deductions, penalty levy, and the interpretation of inaccurate particulars of income or concealment as per the Supreme Court's decision.
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