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2023 (12) TMI 1033 - AT - Income TaxPenalty u/s 271(1)(c) - disallowance u/s. 36(1)(iii) - Penalty imposed for furnishing inaccurate particulars of income - HELD THAT - It is pertinent to note that the Hon ble Supreme Court in case of Reliance Petro-Product Pvt. Ltd. 2010 (3) TMI 19 - SUPREME COURT categorically stated that the word inaccurate particulars means that the details supplied in the return are not accurate not exact or correct and not according to truth or erroneous. In the absence of finding by the AO that any detail supplied by the assessee in its return were found inaccurate or false cannot attract section 271(1)(c) of the Act. In fact, the assessee at the time of assessment proceedings has given a detailed calculation related to interest u/s. 36(1)(iii) on borrowed funds for acquiring capital assets and this very same amount was added by the AO and thus it cannot be said that the assessee furnished inaccurate particulars of income or concealed particulars of income though the assessee was under bonafide mistake did not state the same in its return of income. The notice also lapses on the part of not specifying the particular of limb of section 271(1)(c) of the Act which was decided by the Hon ble Apex Court in case of CIT vs. SSA s Emerald Meadows 2016 (8) TMI 1145 - SC ORDER , hence the appeal of the assessee is allowed and the penalty does not survive. Decided in favour of assessee.
Issues involved:
The appeal challenges the penalty order issued under section 271(1)(c) by the Assessing Officer for furnishing inaccurate particulars of income and concealing income. Details of the Judgment: 1. Technical Defect in Penalty Notice: The appellant contended that the penalty notice did not specify under which limb of section 271(1)(c) the penalty was levied, raising a technical defect. The appellant argued that the Assessing Officer failed to clarify whether the penalty was imposed for concealment of income or inaccurate particulars. Citing the decision in CIT vs. SSA's Emerald Meadows, the appellant emphasized the importance of specifying the exact basis for levying the penalty. 2. Change of Opinion Regarding Expenditure: The appellant further argued that no penalty should be imposed in cases where there is merely a change of opinion regarding the nature of certain expenditures, specifically distinguishing between capital and revenue expenditures. This argument aimed to challenge the validity of the penalty imposed under section 271(1)(c) by the Assessing Officer. 3. Assessment and Penalty Proceedings: The assessment for the relevant year was completed with a disallowance under section 36(1)(iii), leading to penalty proceedings under section 271(1)(c). The Assessing Officer issued a show cause notice, and after considering the appellant's response, levied a penalty for furnishing inaccurate particulars of income. The appellant, however, maintained that the disallowed interest amount was a bonafide error and a technical issue, not amounting to concealment or inaccuracies. 4. Appellate Proceedings and Decision: The appellant appealed the penalty order before the CIT(A), who upheld the penalty. During the appellate proceedings, the appellant argued that the interest calculation was a genuine mistake and not intentional concealment. The appellant relied on the decision in CIT vs. Reliance Petro-Product Ltd. to support their claim that the penalty was unwarranted. 5. Judicial Analysis and Ruling: After hearing both parties and reviewing the case details, the tribunal found merit in the appellant's arguments. The tribunal emphasized that the details supplied in the return were not inaccurate or false, as the Assessing Officer had considered the same interest amount in the assessment. The tribunal also noted the failure to specify the particular limb of section 271(1)(c) in the penalty notice, as highlighted in the decision of CIT vs. SSA's Emerald Meadows. Consequently, the tribunal allowed the appeal, ruling in favor of the appellant and concluding that the penalty was not justified. 6. Outcome: The tribunal allowed the appeal of the appellant, setting aside the penalty imposed under section 271(1)(c) for furnishing inaccurate particulars of income and concealing income. The decision was pronounced in the open court on 20-12-2023.
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