2016 (4) TMI 1056 - AT - Income Tax

Levy of penalty u/s.271(1)(c) - Held that - The assessee has wrongly computed the deduction u/s.80-IA of the Act by showing the wrong depreciation. Had the Assessing Officer not verified it, it would have gone out of the taxation. Being so, in the present case in hand also there is furnishing of inaccurate particulars of income.Accordingly, we are inclined to confirm the levy of u/s.271(1)(c) of the Act. - Decided against assessee.

Summary

Issues:
1. Condonation of delay in filing appeal against penalty u/s.271(1)(c) of the Income Tax Act.
2. Validity of penalty u/s.271(1)(c) for wrong claim of depreciation and consequent impact on reserves.
3. Interpretation of provisions of s.271(1)(c) regarding furnishing inaccurate particulars of income.
4. Comparison with relevant case laws regarding penalty imposition under s.271(1)(c).

Issue 1: Condonation of Delay
The appellant filed an appeal against the penalty u/s.271(1)(c) for a delay of 58 days, citing the illness of the person handling appeal papers as the reason. The medical certificate provided supported the delay justification. The Tribunal examined the condonation petition and accepted the reasons as justified, thereby condoning the delay and admitting the appeal.

Issue 2: Validity of Penalty for Wrong Claim of Depreciation
The appellant claimed excess deduction u/s.80IB due to incorrect depreciation calculation, leading to a penalty u/s.271(1)(c). The Commissioner held that such wrong claims impact reserves and surpluses, affecting subsequent years. The Tribunal agreed that a wrong claim should not form the basis for business reserves, upholding the penalty based on inaccurate particulars of income.

Issue 3: Interpretation of s.271(1)(c) Provisions
The Commissioner found the appellant's explanation unsatisfactory, indicating a willful attempt to claim more deduction by not following IT Rules for depreciation calculation. Furnishing inaccurate particulars impacts reserves in subsequent years, attracting penalty u/s.271(1)(c) for cascading effects on financial statements. The Tribunal upheld the penalty based on the submission of inaccurate particulars of income.

Issue 4: Comparison with Relevant Case Laws
The Tribunal compared the present case with judgments such as CIT Vs. Nalwa Sons Investments Ltd. and M/s. Sri Gokulam Hotels India Pvt. Ltd. The Tribunal noted that incorrect computation of deductions, as in the appellant's case, warranted penalty imposition under s.271(1)(c). The Tribunal differentiated the case from earlier judgments due to subsequent legislative changes, confirming the levy of penalty u/s.271(1)(c) in the present case.

In conclusion, the Tribunal dismissed the appeal, affirming the penalty u/s.271(1)(c) for the wrong claim of depreciation impacting reserves, in accordance with the provisions and interpretations discussed in the judgment.