2023 (3) TMI 1155 - AT - Income Tax

Penalty u/s. 271(1)(c) - deduction u/s. 80P(2)(a)(i) denied - inaccurate claim OR inaccurate particulars of income - whether the assessee has furnished inaccurate particulars of income with respect to the interest income from the nationalized bank by claiming the deduction under section 80P(2)(a)(i)? - HELD THAT - The claim of the assessee at the most can be regarded as inaccurate claim which cannot be equated with the furnishing inaccurate particulars of income . It is for the reason that nothing has been brought on record by the authorities below suggesting that the assessee has furnished the particulars of income with dishonest intent. As regards the Explanation 1 to section 271(1)(c) of the Act, there was no iota of evidence suggesting that the explanation offered by the assessee was false. Thus the claim of the assessee cannot be said amounting to concealment of particulars of income . There was no finding of the authorities below qua the fact that the assessee fails to substantiate the explanation offered by him and fails to prove that such explanation is bonafide with respect to material facts relating to the computation of total income. Thus in our considered view the provisions of Explanation 1 to section 271(1)(c) of the Act cannot be attracted in the given facts and circumstances. We set aside the finding of the learned CIT (A) and direct the AO to delete the penalty levied by him under section 271(1)(c) of the Act. Thus the ground of appeal of the assessee is allowed.

Summary

Issues Involved:
The issues involved in the judgment are the disallowance of deduction under section 80P(2)(a)(i) of the Income Tax Act, 1961 and the imposition of penalty under section 271(1)(c) for furnishing inaccurate particulars of income.

Disallowance of Deduction under Section 80P(2)(a)(i):
The assessee, a Co-operative Society, claimed a deduction under section 80P(2)(a)(i) for the Assessment Year 2013-14. However, during assessment proceedings, it was found that the assessee had interest income from deposits with nationalized banks and interest on Income Tax Refund. The Assessing Officer disallowed the deduction under section 80P(2)(a)(i) and treated the interest income as "Income from Other Sources." The CIT(A) dismissed the appeal, leading to penalty proceedings under section 271(1)(c) for furnishing inaccurate particulars of income.

Imposition of Penalty under Section 271(1)(c):
The Assessing Officer levied a penalty under section 271(1)(c) on the assessee for furnishing inaccurate particulars of income. The CIT(A) partly allowed the appeal, upholding the penalty but directed the AO to levy the concealment penalty on the quantum amount determined after a subsequent ITAT order. The assessee appealed, arguing that the penalty was illegal and against the principles of natural justice. The Tribunal considered whether the assessee's claim for deduction was inaccurate and whether there was a deliberate intent to furnish inaccurate particulars of income.

Tribunal's Decision:
The Tribunal analyzed the definition of "inaccurate" and the provisions of section 271(1)(c) and Explanation 1. It noted that the claim for deduction was denied based on a High Court judgment not available at the time of filing the return, indicating a bona fide belief. The Tribunal found that the claim was at most an inaccurate claim, not equating to furnishing inaccurate particulars of income. There was no evidence of dishonest intent or false explanation by the assessee. Therefore, the Tribunal set aside the penalty imposed under section 271(1)(c) and allowed the appeal, directing the AO to delete the penalty.

Conclusion:
The Tribunal's decision focused on the distinction between inaccurate claims and furnishing inaccurate particulars of income, emphasizing the absence of dishonest intent or false explanations by the assessee. The Tribunal's analysis led to the deletion of the penalty imposed under section 271(1)(c), providing relief to the assessee in this case.