2013 (7) TMI 418 - HC - Income Tax

Penalty u/s 271(1)(c) - Unsustainable claim - Tribunal deleted penalty following previous decisions - Held that - Claim made by the respondent assessee that the amount attributable to the goodwill amount which was written off is not chargeable to tax was not accepted by the revenue - Mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars - Following decision of CIT v/s. Reliance Petro Products Ltd. 2010 (3) TMI 80 - SUPREME COURT - Decided against Revenue.

Summary

Issues:
Challenge to deletion of penalty under Section 271(1)(c) of the Income Tax Act, 1961 for Assessment Year 1992-93.

Analysis:
The Revenue challenged the deletion of penalty under Section 271(1)(c) of the Income Tax Act, 1961 for the Assessment Year 1992-93. The Assessing Officer had assessed an amount as goodwill chargeable to capital gain tax, directing penalty proceedings against the respondent assessee. The respondent contended that no penalty should be imposed as there was no concealment or inaccurate particulars of income. The Assessing Officer imposed a penalty, alleging a violation of Section 45(4) of the Act. The CIT(A) set aside the penalty, stating it was imposed due to a difference in interpretation of provisions. The Tribunal upheld the CIT(A)'s decision, considering the respondent's claim that no capital gain tax was payable. The Revenue argued that the Tribunal should have awaited their appeal decision before deleting the penalty. However, the Court found no concealment of income or inaccurate particulars, citing the Supreme Court's decision in CIT v. Reliance Petro Products Ltd. The Court concluded that no penalty was warranted, as the respondent's view was reasonable and disclosed in their returns.

The key issue was whether penalty under Section 271(1)(c) should be imposed on the respondent assessee for Assessment Year 1992-93. The Revenue alleged a violation of Section 45(4) of the Income Tax Act due to the writing off of goodwill, leading to the imposition of a penalty. However, the respondent argued that there was no concealment or inaccurate particulars of income, as the goodwill amount was fully disclosed in their returns. The CIT(A) and the Tribunal both ruled in favor of the respondent, emphasizing the absence of concealment. The Court upheld this decision, citing the Supreme Court's precedent that penalty is not justified without concealment or inaccurate particulars. The Court found the respondent's interpretation reasonable, especially since the Tribunal had accepted it in a prior quantum appeal.

In summary, the Court dismissed the Revenue's appeal against the deletion of penalty under Section 271(1)(c) for the Assessment Year 1992-93. The Court found no concealment or inaccurate particulars of income by the respondent assessee, as the goodwill amount was disclosed in their returns. The Court emphasized that penalty under the Act requires concealment or furnishing inaccurate particulars, which was not the case here. The Court relied on the Supreme Court's decision to support its conclusion that no penalty was warranted in this situation.