2012 (7) TMI 359 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - penalty levied on account of reduction in the claim made by the assessee u/s 80IB - Held that - Penalty merely because the claim in the revised return has been reduced is not warranted as Section 271(c) contemplates levy of penalty if assessee conceals the particulars of total income as is referred in S. 2 (45) or furnishes inaccurate particulars of such total income - there is no finding that any details supplied by the assessee in its return were found to be incorrect or erroneous or false - A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars - decided in favour of assessee.

Summary

Issues:
Levy of penalty u/s 271(1)(c) of the Income Tax Act, 1961 based on reduction in claim made by the assessee-company u/s 80IB.

Analysis:

Issue 1: Levy of Penalty - Assessment Year 2003-04
The appellant challenged the penalty on the grounds of limitation and merits. The penalty was imposed due to a reduction in the claim made by the assessee under section 80IB. The chronology of events showed discrepancies in the computation of deductions, with the correct figure being contested by the appellant. The Tribunal granted further relief, setting aside the matter for recomputation. The appellant argued that the penalty was unjustified as there was no charge of furnishing inaccurate particulars of income. Citing the decision in CIT vs. Reliance Petroproducts Pvt. Ltd., it was contended that the penalty was not warranted.

Issue 2: Legal Basis for Penalty
The Senior DR argued that penalty could be imposed even after a recomputation of deductions under section 80IB. Referring to the penalty order, it was highlighted that the assessee was considered a defaulter under section 271(1)(c) for furnishing inaccurate particulars of income. The legal provisions were explained, emphasizing that claiming excessive deductions could lead to penalties. Judicial pronouncements were cited to support the contention that concealing income through exaggerated deductions warranted penalties.

Issue 3: Tribunal's Decision
The Tribunal analyzed the facts and submissions, comparing them to the case of Reliance Petroproducts Pvt. Ltd. It was noted that there was no finding of inaccurate particulars submitted by the assessee. Relying on the definition of "inaccurate" and "particulars," the Tribunal concluded that the penalty was not justified as there were no incorrect or false details in the return. Consequently, following the decision, the penalty was deleted by the CIT(A) for both assessment years 2003-04 and 2004-05. As the appellant received relief on merits, the question of limitation was deemed unnecessary. Therefore, both appeals were dismissed.

This detailed analysis covers the issues of penalty levy, legal basis for penalties, and the Tribunal's decision, providing a comprehensive understanding of the judgment.