2010 (5) TMI 61 - HC - Income Tax

Penalty u/s 271(1)(c) furnishing inaccurate particulars of income - Assessing Officer imposed penalty of Rs 4, 61, 913/- on the assessee for allegedly furnishing inaccurate particulars of income. - The assessee had received interest of Rs 18, 62, 538/- on Fixed Deposits and had also received certain other receipts totaling Rs 21, 91, 820/-.These were included in the business income of the assessee and were treated by the Assessing Officer as the assessee s income from other sources. The eligible profits for computation of relief under Section 80HHD of the said Act were thereby reduced. The Assessing Officer computed the relief under Section 80HHD at Rs 42, 90, 282/- against the amount of Rs 53, 92, 895/- as claimed by the assessee. This resulted in excess amount of deduction on the part of the assessee under Section 80HHD at Rs 11, 02, 613/-. It was on the basis of this excess claim that the penalty of Rs 4, 61, 913/- was imposed on the assessee. Held that The Tribunal took the view that the assessee did not furnish any inaccurate particulars of income nor did the assessee conceal any part of its income. The question with regard to the claim of deduction under Section 80HHD was at that point of time debatable. Consequently the Tribunal held that this was not a case where imposition of penalty under Section 271(1)(c) of the said Act could be justified. Order of ITAT confirmed.

Summary

Issues:
1. Penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961 for allegedly furnishing inaccurate particulars of income.
2. Treatment of interest on Fixed Deposits and other receipts in business income for computation of relief under Section 80HHD.
3. Deletion of penalty by the Commissioner of Income Tax and confirmation by the Income Tax Appellate Tribunal.

Analysis:
1. The appeal challenged the penalty imposed by the Assessing Officer under Section 271(1)(c) of the Income Tax Act, 1961, amounting to Rs 4,61,913, for allegedly furnishing inaccurate particulars of income. The impugned order arose from penalty proceedings related to the assessment year 2001-2002. The Assessing Officer reduced the eligible profits for relief under Section 80HHD based on the assessee's interest on Fixed Deposits and other receipts, resulting in an excess claim by the assessee and subsequent penalty imposition.

2. The assessee had received interest on Fixed Deposits and other receipts, which were included in the business income and treated as income from other sources by the Assessing Officer. The computation of relief under Section 80HHD was disputed, with the Assessing Officer reducing the claimed amount, leading to an excess deduction by the assessee. The Tribunal found the claim debatable at that time and concluded that no inaccurate particulars were furnished, nor was any income concealed by the assessee.

3. The Commissioner of Income Tax deleted the penalty, a decision upheld by the Income Tax Appellate Tribunal. The Tribunal's reasoning was deemed sound, with no identified flaws or perversity in the factual findings. It was held that the imposition of penalty under Section 271(1)(c) was unwarranted in this case due to the debatable nature of the claim under Section 80HHD. Consequently, the appeal was dismissed by the High Court of Delhi, affirming the Tribunal's decision to delete the penalty.

This comprehensive analysis covers the issues related to the penalty imposition, treatment of income for relief computation, and the subsequent deletion of the penalty by the authorities, providing a detailed overview of the judgment delivered by the High Court of Delhi.