2015 (6) TMI 853 - AT - Income Tax

Penalty u/s 271(1)(c) - assessee accepted that he had furnished inaccurate particulars of income u/s 80IB of the Act and withdraw the claim - Held that - The assessee has withdrawn its claim of deduction filed u/s 80IB of the Act at the very outset of assessment proceedings prior to issuance of notice u/s 142(1) of the Act and the reason as explained by the assessee was that their claim was valid but as they are not in possession of excise certificate indicating date of commencement of business, therefore, they agreed for addition in this regard. As relying on CIT vs Reliance Petroproducts Ltd.(2010 (3) TMI 80 - SUPREME COURT) wherein their Lordships held that merely because the claim of the assessee was not accepted or not found to be acceptable by the revenue authorities, that by itself would not attract penalty u/s 271(1)(c) of the Act. In the present case, we disagree with the conclusion of the AO that the assessee had furnished either inaccurate particulars of income or submitted wrong statement of its income during assessment proceedings and as we have noted above the assessee withdrew its claim of deduction us/ 80IB of the Act before initiation of assessment proceedings. Therefore, we approve the conclusion of the CIT(A) deleting the penalty - Decided in favour of assessee.

Summary

Issues:
Appeal against deletion of penalty under section 271(1)(c) of the Income Tax Act, 1961 for furnishing inaccurate particulars of income.

Analysis:

1. Background and Assessment Proceedings:
The appeal was filed by the revenue against the order of the CIT(A) deleting the penalty imposed under section 271(1)(c) of the IT Act for furnishing inaccurate particulars of income. The assessee initially claimed a deduction under section 80IB but later withdrew the claim before the assessment proceedings began. The AO imposed a penalty of Rs. 41,49,854 for the withdrawal of the claim.

2. Arguments of the Revenue:
The revenue contended that the CIT(A) erred in deleting the penalty as the AO initiated penalty proceedings based on the inaccurate particulars of income furnished by the assessee. The revenue argued that the CIT(A) ignored crucial facts such as the absence of an excise certificate and the assessee's acceptance of the mistake only after the assessment proceedings were initiated.

3. Arguments of the Assessee:
The assessee, on the other hand, argued that the claim withdrawal was due to a bona fide mistake, rectified before the assessment proceedings began. The assessee cited precedents where penalties were not imposed for similar situations of clerical errors or voluntary disclosures of income during assessment proceedings.

4. Decision of the Tribunal:
The Tribunal noted that the assessee withdrew the claim before the assessment proceedings started, indicating a lack of intention to furnish inaccurate particulars. The Tribunal referenced the Supreme Court's decision that the rejection of a claim does not automatically warrant a penalty. The Tribunal upheld the CIT(A)'s decision to delete the penalty, emphasizing that the initiation of penalty proceedings lacked valid jurisdiction due to the circumstances of the case.

5. Conclusion:
In conclusion, the Tribunal dismissed the revenue's appeal, affirming the deletion of the penalty under section 271(1)(c) of the IT Act. The Tribunal found no ambiguity or valid reason to interfere with the CIT(A)'s decision, considering the factual and legal aspects of the case.

This detailed analysis highlights the key arguments, legal precedents, and the Tribunal's reasoning behind upholding the deletion of the penalty in this tax appeal case.