2016 (9) TMI 849 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - deduction u/s 80IB - Held that - The assessee has claimed that revised returns for both asstt. years 2005-06 and 2006-07 were filed, withdrawing claim u/s 80IB of I.T. Act at the time when return for asstt. year 2007-08 was being filed. The assessee claims that the realisation that the assessee was not eligible for deduction u/s 80IB of I.T. Act was arrived at the time of filing return for asstt. year 2007-08 impliedly claiming thereby that the assessee decided to withdraw the claims u/s 80IB of I.T. Act for asstt. year 2005-06 and asstt. year 2006-07 (by filing revised returns of income) not because of the questionnaire dated 4.7.2007 issued by the Ld. AO) but because subsequently at the time of filing return for asstt. year 2007-08 the assessee on its own realised that deduction u/s 80IB was not admissible. This is a self-serving claim without any credible proof. Self-serving claims without credible proof do not merit serious consideration, and in the facts and circumstances of the cases before us, it does not advance the cause of the assessee. Had the revised returns been filed (withdrawing claim made u/s 80IB of I.T. Act for asstt. year 2005-06 and 2006-07) well before the time of filing return for asstt. year 2007-08 i.e. well before 31.10.2007, but after questionnaire dated 4.7.2007 was issued by Ld. AO, would the assessee be justified in claiming a favourable consideration ? No. In view of the reasoning earlier given in this order, the assessee would still be hit by Explanation 1(B) to S. 271(1)(c) of I.T. Act and would be still liable to pay penalty u/s 271(1)(c) of I.T. Act. Merely because the assessee delayed the filing of revised return of income (for asstt. year 2005-06 and 2006-07) till 31.10.2007, i.e. till the time of filing of return for asstt. year 2007- 08 even after receiving questionnaire dated 4.7.2007 ; the assesee cannot claim favourable consideration. One s own mistake or delay can t be used to advance one s cause. In law, nobody can claim the benefit of delays or mistakes on his own part; though it may advance the cause of the other side. Penalties levied u/s 271(1)(c) of I.T. Act by the Ld. AO for both asstt. years 2005-06 and 2006-07 ; and upheld by the Ld. CIT(A) for both these years are hereby confirmed. We uphold the orders of the lower authorities for both asstt. years 2005-06 and 2006-07 and dismiss the appeals filed by the assessee for both asstt. year 2005-06 and 2006-07.- Decided against assessee.

Summary

Issues Involved:
1. Justification of penalty for furnishing inaccurate particulars of income under Section 271(1)(c) of the Income Tax Act, 1961.
2. Bona fide mistake and revised returns.
3. Disclosure of facts and eligibility for statutory deductions under Section 80IB.

Detailed Analysis:

1. Justification of Penalty for Furnishing Inaccurate Particulars of Income:
The primary issue revolves around whether the CIT(A) was justified in confirming penalties of ?10,35,008/- for AY 2005-06 and ?15,20,262/- for AY 2006-07 under Section 271(1)(c) of the Income Tax Act for furnishing inaccurate particulars of income. The penalties were imposed due to the assessee's claims under Section 80IB, which were later withdrawn. The AO initiated penalty proceedings after the assessee failed to justify the deductions during assessment.

2. Bona Fide Mistake and Revised Returns:
The assessee argued that any mistake in claiming the deductions was bona fide and that revised returns were filed to correct the errors. However, the AO and CIT(A) noted that the revised returns were filed only after the issue was raised by the department. The revised return for AY 2005-06 was beyond the statutory time limit, and for AY 2006-07, it was filed in response to the department's query, not voluntarily. The CIT(A) and AO held that this did not absolve the assessee from penalty under Section 271(1)(c).

3. Disclosure of Facts and Eligibility for Statutory Deductions:
The assessee contended that all facts relating to the statutory deduction were on record and the claim was only in the computation. However, the AO and CIT(A) found that the assessee failed to provide any explanation or particulars about the eligibility criteria for the deduction under Section 80IB. The assessee’s claim that the realization of ineligibility came while preparing the return for AY 2007-08 was not substantiated with credible proof. The authorities held that the assessee's actions were not bona fide and amounted to furnishing inaccurate particulars of income.

Conclusion:
The tribunal upheld the penalties imposed by the AO and confirmed by the CIT(A) for both AY 2005-06 and AY 2006-07. The assessee’s appeals were dismissed on the grounds that:
- The revised returns were filed only after the issue was raised by the department.
- The assessee did not provide a bona fide explanation for the initial claims.
- The actions of the assessee were seen as an attempt to evade tax, falling under the purview of Section 271(1)(c).

The tribunal emphasized that the penalty provisions are meant to deter such actions and upheld the orders of the lower authorities, dismissing the appeals. The judgment highlighted the importance of bona fide actions and timely disclosure of accurate particulars in tax returns.