2015 (12) TMI 974 - HC - Income Tax

Penalty u/s 271(1)(c) - disallowance under Section 80IC - Held that - A glance at the provisions of Section 271(1)(c) of the Income Tax Act, 1961 suggests that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars in his income. The meaning of the word particulars used in section 271(1)(c) would embrace the details of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, because that is the only document where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. To attract penalty, the details supplied in the return must not be accurate, nor exact or correct, no according to the truth or erroneous - Decided in favour of assessee

Summary

Issues:
- Appeal by revenue under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal regarding penalty levied on the assessee for the assessment year 2006-07.

Analysis:
1. Background and Assessment Details:
The appeal was filed by the revenue under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal (ITA) regarding the penalty imposed on the assessee for the assessment year 2006-07. The assessee, engaged in manufacturing, filed its return declaring income, which was later scrutinized. The Commissioner of Income Tax found the initial assessment erroneous and set it aside for re-examination. Subsequently, additions were made on account of disallowance under Section 80IC of the Act, leading to penalty proceedings under Section 271(1)(c) for concealment of income and inaccurate particulars.

2. Arguments and Tribunal's Decision:
The revenue contended that the penalty deletion by the CIT(A) and the Tribunal was incorrect, emphasizing that deductions under Section 80IC were wrongly claimed by the assessee. However, the CIT(A) and the Tribunal found no merit in the revenue's submissions. They observed that the particulars and facts were duly disclosed in the return, and the additions were based on the same material as the original assessment. The CIT(A) cited the case law of CIT vs. Reliance Petroproducts Pvt. Ltd. to emphasize that incorrect claims do not amount to furnishing inaccurate particulars. The Tribunal upheld the CIT(A)'s decision based on similar circumstances and the principles laid down by the Supreme Court.

3. Judicial Findings and Conclusion:
The High Court concurred with the decisions of the CIT(A) and the Tribunal, noting that the approach taken was reasonable and not based on misreading of evidence. Citing the judgment in Commissioner of Income Tax v. Reliance Petroproducts Ltd., the High Court reiterated that to attract penalty, the details supplied in the return must be inaccurate. As all relevant facts were disclosed, there was no concealment of income or furnishing of inaccurate particulars. Consequently, the High Court dismissed the appeal, concluding that no substantial question of law arose in this case.

In summary, the High Court upheld the decisions of the lower authorities, emphasizing the importance of disclosing all relevant facts in the return and clarifying that incorrect claims do not necessarily constitute inaccurate particulars for penalty imposition under the Income Tax Act, 1961.