2014 (2) TMI 803 - AT - Income Tax

Confirmation of penalty u/s 271(1)(c) of the Act Held that - The penalty has been levied on account of disallowance of expenses under various heads on ad-hoc disallowance out of expenses, no penalty under Section 271(1)(c) is leviable the decision in CIT Vs. Reliance Petroproducts Pvt.Ltd. 2010 (3) TMI 80 - SUPREME COURT followed - Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c) thus, the penalty is set aside Decided in favour of Assessee.

Summary

Issues involved:
Confirmation of penalty under Section 271(1)(c) of the Income-tax Act, 1961 based on disallowance of expenses.

Analysis:

1. Confirmation of Penalty:
The appeal was against the confirmation of a penalty of Rs.1,37,440/- levied by the Assessing Officer under Section 271(1)(c) of the Income-tax Act, 1961. The penalty was imposed due to the disallowance of expenses totaling Rs.5,22,996 under various heads. Part of these expenses was disallowed on an ad-hoc basis. However, the Tribunal noted that on ad-hoc disallowance of expenses, no penalty under Section 271(1)(c) should be levied. The Tribunal referred to a decision by the Hon'ble Apex Court in the case of CIT Vs. Reliance Petroproducts Pvt.Ltd., where it was held that mere taking of a claim not sustainable in law does not amount to furnishing inaccurate particulars regarding the income of the assessee. Therefore, in the absence of any finding that the details supplied by the assessee were incorrect or false, the penalty under Section 271(1)(c) was not justified.

2. Legal Precedent:
The Tribunal's decision to cancel the penalty was based on the legal precedent set by the Hon'ble Apex Court, emphasizing that the mere inclusion of a claim that is not sustainable in law does not constitute furnishing inaccurate particulars. The Tribunal's decision was in line with the principle established in the cited case law, providing a clear justification for canceling the penalty levied under Section 271(1)(c) of the Act.

3. Conclusion:
In conclusion, the Tribunal allowed the appeal of the assessee, canceling the penalty imposed under Section 271(1)(c) of the Income-tax Act, 1961. The decision was pronounced in open court on 20th December 2013, providing a favorable outcome for the assessee based on the legal interpretation and application of relevant provisions and precedents.

This detailed analysis of the judgment highlights the issues involved, the legal reasoning applied by the Tribunal, and the final decision reached in favor of the assessee.