2013 (7) TMI 81 - AT - Income Tax

Penalty u/s 271(1)(c) - disallowances u/s 43B for unpaid liability of sales tax, provident funds etc. - Held that - As decided in CIT Vs. Reliance Petroproducts Pvt.Ltd 2010 (3) TMI 80 - SUPREME COURT & Price water house Coopers Pvt.Ltd. 2012 (9) TMI 775 - SUPREME COURT mere submitting a claim which is incorrect in law would not amount to giving inaccurate particulars of the income of the assessee. If the assessee s claim is bona fide, then he will not be liable for penalty. In the present case, the failure of the assessee to make disallowance u/s 43B in the return of income cannot be held to be mala fide because the returned loss by the assessee was Rs. 1,57,14,572/-. Even after the disallowance u/s 43B amounting to Rs. 14,14,057/-, the assessed loss is Rs. 1,43,00,515/-. That ordinarily, no assessee would try to increase the loss by making a wrong claim. Moreover, the assessee has already disclosed that the amount was payable. Thus, there was no concealment of any fact or furnishing of inaccurate particulars - appeal of the assessee allowed.

Summary

Issues:
Levy of penalty under Section 271(1)(c) of the Income-tax Act, 1961 for disallowances under Section 43B.

Analysis:
The appeal challenged the penalty imposed on the assessee under Section 271(1)(c) for disallowances under Section 43B. The Tribunal considered the arguments and referred to decisions of the Hon'ble Apex Court to determine the issue. The first decision cited was CIT Vs. Reliance Petroproducts Pvt.Ltd., where it was held that a claim not sustainable in law does not amount to furnishing inaccurate particulars. The second decision referred to was PricewaterhouseCoopers Pvt.Ltd., emphasizing that a bona fide error in return filing does not constitute concealment of income. The Tribunal noted the CIT(A)'s reliance on the decision in CIT Vs. Zoom Communication Pvt.Ltd., which stressed the need for a bona fide claim to avoid penalty under Section 271(1)(c).

The Tribunal analyzed the facts and concluded that the failure to make disallowance under Section 43B was not mala fide, as the assessed loss even after disallowance was substantial. The Tribunal determined that the assessee had disclosed the payable amount, indicating no concealment or furnishing of inaccurate particulars. Therefore, the decisions in Reliance Petroproducts Pvt.Ltd. and PricewaterhouseCoopers Pvt.Ltd. were deemed applicable, leading to the cancellation of the penalty under Section 271(1)(c).

In summary, the Tribunal allowed the appeal of the assessee, setting aside the penalty levied under Section 271(1)(c) based on the assessment of the facts and the applicability of relevant legal precedents.