2014 (4) TMI 703 - AT - Income Tax

Deletion of penalty u/s 271(1)(c) of the Act Furnishing of inaccurate particulars Held that - CIT(A) rightly was of the view that there is no furnishing of inaccurate particulars by assessee Only issue is whether assessee s claim under section 80IB and 80HHE, which are allowable to assessee, are to be calculated on the same income or after excluding one from the other - The issue is a debatable and it cannot be found fault with the claim of assessee at the time of filing of the returns - that itself per se does not lead to levy of penalty u/s 271(1)(c) as it cannot be considered that assessee has either concealed incomes or furnished inaccurate particulars of income, two of the parameters necessary for levy of penalty u/s 271(1)(c). Relying upon COMMISSIONER OF INCOME-TAX Versus RELIANCE PETROPRODUCTS PVT. LTD. 2010 (3) TMI 80 - SUPREME COURT - Mere disallowance of a claim does not lead to penalty u/s 271(1)(c) of the Act Where there is no finding that any details supplied by 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) - A mere making of a claim, which is not sustainable in law, by itself , will not amount to furnishing inaccurate particulars regarding the income of assessee - Such a claim made in the return cannot amount to furnishing inaccurate particulars - the order of the CIT(A) upheld Decided against Revenue.

Summary

Issues:
Revenue's appeal against the deletion of penalties under section 271(1)(c) for the assessment years 2002-03, 2003-04, and 2004-05.

Analysis:
The appeals were filed by the Revenue against the CIT(A)'s order deleting penalties under section 271(1)(c) for the mentioned assessment years. The dispute arose from the assessee's claim of deductions under sections 80IB and 80HHE of the Income Tax Act, 1961. The Assessing Officer (A.O.) contended that both deductions could not be claimed on the same profit, as per section 80IA(9) of the Act. The A.O. considered it a fit case for penalty due to the alleged wrongful deductions by the assessee. However, the CIT(A) held that the assessee had properly disclosed all material facts and treated income correctly in the returns and financial statements. The CIT(A) noted that the issue was debatable at the time of filing the returns, as the decision relied upon by the A.O. was not available to the assessee then.

The Revenue's main contention was that the mere submission of facts in the return does not absolve the assessee from disclosing the true income. Despite the absence of the assessee during the proceedings, the issue was decided on its merits. The ITAT concurred with the CIT(A)'s decision, emphasizing that there was no furnishing of inaccurate particulars by the assessee. The ITAT noted that the debate centered on whether the deductions under sections 80IB and 80HHE should be calculated on the same income or separately. As the issue was debatable and the assessee had disclosed information properly, the ITAT upheld the CIT(A)'s order.

In its judgment, the ITAT referred to the Supreme Court's decision in Reliance Petro Products case, highlighting that penalty under section 271(1)(c) requires concealment or furnishing inaccurate particulars of income. Mere disallowance of a claim does not warrant a penalty if the details in the return are not found to be incorrect or inaccurate. The ITAT, following the Supreme Court's principles, dismissed the Revenue's appeal for all the years, emphasizing that making an incorrect claim does not amount to furnishing inaccurate particulars. The ITAT upheld the CIT(A)'s order, and the appeals of the Revenue were consequently dismissed.