2023 (10) TMI 133 - AT - Income Tax

Penalty U/s 271(1)(c) - disallowance the claim of deduction u/s. 10(34) namely dividend income received by the assessee - HELD THAT - As it is clear from assessment and reassessment proceedings in the case of the assessee for earlier assessment years 2008-09 to 2012-13, the Ld. A.O. has not levied Penalty u/s. 271(1)(c) for furnishing inaccurate particulars of income on the very same issue of claim u/s. 10(34) on the dividend income received by the assessee. However only for the present A.Y. 2013-14, A.O. levied penalty, which is inconsistent with that of the earlier assessment years. Hon ble Supreme Court of India in the case of Reliance Petroproducts Pvt. Ltd. 2010 (3) TMI 80 - SUPREME COURT has held the words inaccurate particulars mean that the details supplied in the Return are not accurate, not exact or correct, not according to truth or erroneous. In the absence of a finding by the AO, that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false, there would be no question of inviting penalty u/s 271(1)(c). Argument of the revenue that submitting an incorrect claim for expenditure would amount to giving inaccurate particulars of such income is not correct. By no stretch of imagination can the making of an incorrect claim in law, tantamount to furnishing inaccurate particulars. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. If the contention of the Revenue is accepted then in case of every Return, where the claim made is not accepted by the AO for any reason, the assessee will invite penalty u/s 271 (1) (C). That is clearly no the intendment of the Legislature. Thus penalty deleted - Decided in favour of assessee.

Summary

Issues Involved:
The judgment involves issues related to penalty under section 271(1)(c) of the Income Tax Act, 1961 for furnishing inaccurate particulars of income, specifically regarding the claim of deduction u/s. 10(34) on dividend income received by the assessee from a bank.

Facts of the Case:
The assessee, a firm engaged in manufacturing and trading of edible oil and oil seeds, filed its Return of Income for the Assessment Year 2013-14 admitting total income. The Assessment Officer disallowed the claim of deduction u/s. 10(34) on dividend income received from a bank, leading to penalty proceedings under section 271(1)(c) for furnishing inaccurate particulars of income.

Contentions and Submissions:
The assessee contended that claiming exemption does not amount to furnishing inaccurate particulars and cited various case laws to support the argument. The assessee emphasized that no inaccurate particulars were filed, and incorrect claims do not necessarily constitute inaccurate particulars of income.

Decision of Lower Authorities:
The Commissioner of Income Tax (Appeals) confirmed the penalty, stating that the assessee misrepresented facts by claiming exemption on dividend income from a bank not subject to dividend distribution tax. The Commissioner held that the claim of exempt income was a case of misrepresentation of facts and furnishing incorrect particulars of income.

Appellate Tribunal's Decision:
The Appellate Tribunal noted inconsistencies in the Assessing Officer's actions across different assessment years regarding the same issue. Relying on judicial precedents, including the Supreme Court's interpretation of "inaccurate particulars," the Tribunal concluded that the penalty for furnishing inaccurate particulars of income was not justified. Citing relevant case laws, the Tribunal allowed the appeal and deleted the penalty levied under section 271(1)(c).

Conclusion:
The Appellate Tribunal, after careful consideration of the facts and legal precedents, allowed the appeal filed by the assessee, deleting the penalty imposed under section 271(1)(c) for furnishing inaccurate particulars of income related to the claim of deduction on dividend income. The Tribunal's decision was based on the interpretation of "inaccurate particulars" and the absence of deliberate misrepresentation of facts by the assessee.

This summary provides a detailed overview of the legal judgment, including the issues involved, facts of the case, arguments presented, decisions of the lower authorities, the Appellate Tribunal's decision, and the final conclusion reached by the Tribunal.