2009 (7) TMI 918 - AT - Income Tax

Summary

Issues Involved:
1. Penalty u/s 271(1)(c) for furnishing inaccurate particulars of income.
2. Withdrawal of deduction claim u/s 80-IB.
3. Disallowance of capital expenditure amounting to Rs. 64,800.

Summary:

1. Penalty u/s 271(1)(c) for furnishing inaccurate particulars of income:
The appeal was filed against the CIT(A) order confirming the penalty of Rs. 24,39,353 imposed by the Assessing Officer (AO) u/s 271(1)(c) of the Income-tax Act, 1961. The penalty was levied for furnishing inaccurate particulars of income concerning the deduction u/s 80-IB and disallowance of capital expenditure.

2. Withdrawal of deduction claim u/s 80-IB:
The assessee, engaged in manufacturing and marketing butter and cheese, claimed deduction u/s 80-I in its return for AY 2004-05, supported by an auditor's certificate in Form No. 10CCB. The AO withdrew the deduction based on the audit objection regarding unabsorbed depreciation, leading to no tax impact. The assessee withdrew its claim for deduction u/s 80-IB for AY 2004-05 to avoid litigation, following legal advice and before the start of scrutiny assessment proceedings.

3. Disallowance of capital expenditure amounting to Rs. 64,800:
The AO initiated penalty proceedings for furnishing inaccurate particulars of income, including the disallowance of capital expenditure. The AO rejected the assessee's argument of bona fide belief and imposed a penalty, stating the claim was withdrawn only after detection by the department.

CIT(A) Decision:
The CIT(A) confirmed the penalty, stating that the appellant had concealed particulars of income and furnished inaccurate particulars, leading to a logical conclusion of conscious concealment.

ITAT Decision:
The ITAT considered the rival submissions and relevant case laws. It noted that the assessee's claim was supported by an auditor's report and was made under a bona fide belief. The ITAT referenced the Gujarat High Court decision in BTX Chemical (P.) Ltd., which held that reliance on expert opinion for claims does not constitute concealment. The ITAT concluded that the penalty u/s 271(1)(c) could not be imposed as the assessee had disclosed all necessary particulars and acted in good faith. The appeal was allowed, and the penalty was deleted.