2012 (11) TMI 221 - AT - Income Tax

Penalty u/s 271(1)(c) Concealment of Income - Following the decision of court in case of CIT vs Reliance Petroproducts Ltd, 2010 (3) TMI 80 - SUPREME COURT held that - Assessee cannot be held guilty of furnishing inaccurate particulars making an incorrect claim in law cannot tantamount to furnishing of inaccurate particulars- Merely because the assessee claimed deduction u/s 80IB which has not been accepted by the Revenue, penalty under s.271(1)(c) is not attracted If the contention of the revenue is accepted, the assessee would be liable for penalty under s.271(1)(c) in every case where the claim made by the assessee is not accepted by the AO for any reason That is clearly not the intendment of the legislature - no infirmity in the orders of ld. CIT(A) - In the result the appeal of the revenue is dismissed.

Summary

Issues:
Deletion of penalty under section 271(1)(c) of the Income Tax Act.

Analysis:
The appeal was filed by the revenue against the order of CIT(A)-I, Kolkata for the assessment year 2004-05. The sole issue raised was the deletion of the penalty levied by the Assessing Officer under section 271(1)(c) of the IT Act. The Assessing Officer had initiated penalty proceedings during the original assessment and the penalty was based on the claim made under section 80IB. The Assessing Officer believed that the wrong claim of deduction amounted to furnishing inaccurate particulars of income. Various judicial decisions were cited to support this view, emphasizing that an improper or wrong claim of deduction constitutes submission of inaccurate particulars of income.

The Assessing Officer's view was challenged by the assessee before the CIT(A), who deleted the penalty after considering submissions and case laws. The CIT(A) observed that the initiation of penalty proceedings during assessment was void and highlighted discrepancies in the tax calculations. The CIT(A) also referred to a Supreme Court judgment stating that making an incorrect claim in law does not amount to furnishing inaccurate particulars of income. The CIT(A) granted relief to the assessee, which was reversed by the ITAT based on the Liberty India case.

During the appeal before the ITAT, the revenue argued for restoring the Assessing Officer's order based on the retrospective effect of the Apex Court's decision. However, the assessee's counsel relied on the CIT(A)'s order and the judgments in the Liberty India and Reliance Petro Products cases to support the deletion of the penalty. The ITAT, after careful consideration, held that the assessee's filing of inaccurate particulars or concealing income was not established, especially in light of the Supreme Court's observations in the Reliance Petro Products case. The ITAT confirmed the CIT(A)'s decision and dismissed the revenue's appeal.

In conclusion, the ITAT upheld the deletion of the penalty under section 271(1)(c) of the IT Act, emphasizing that the assessee's actions did not amount to furnishing inaccurate particulars or concealing income as defined by the law. The ITAT's decision was based on a thorough analysis of the facts, legal precedents, and the specific circumstances of the case, ultimately leading to the dismissal of the revenue's appeal.