2017 (1) TMI 888 - AT - Income Tax

Penalty under section 271(l)(c) - claim of deduction u/s 80IB disallowed - proof of concealment of income - Held that - Nothing has been brought before us to show whether any of the expenses were found to be bogus or false. The claim of the assessee made u/s 80-IB was reduced only because of re-allocation of expenses done by the AO. The exercise of reallocation was done by the AO on the basis of his information and understanding disregarding the claim of the assessee, which was based upon a certificate in form 10CCB issued by a professional expert. Nothing has been brought on record by the AO to show if the certificate was based upon any erroneous premises or wrong facts supplied by the assessee. During the course of penalty proceedings, the assessee furnished detailed explanation in this regard and again took help of his argument that the claim u/s 80IB was made relying upon the certificate wherein bifurcation of expenses was made by a professional expert. The AO did not examine the concerned Chartered Accountant during the course of penalty proceedings before rejecting the explanation of the assessee. Nothing was brought on record by the AO to negate the assertion of the assessee that the claim u/s 80-IB was based upon his bona fide belief for making apportionment of expenses in the manner as was done by the assessee. Even otherwise, the re-allocation exercise done by the AO would also involve some kind of guess work which cannot be said to be purely scientific or devoid of any flaws. If the allocation done by the assessee was not precise and correct as per facts of the case, then, it can also not be said that the re-allocation exercise done by the AO was free from any doubts or ifs and buts. Thus, it is a case where the hypothesis of there being a concealment of income and there not being concealment of income are equal. Under these circumstances, in our considered opinion, it cannot be said that there was any kind of concealment or furnishing of inaccurate particulars of income by the assessee. - Decided in favour of assessee

Summary

Issues:
- Appeal against deletion of penalty under section 271(1)(c) of the Income Tax Act, 1961 by the CIT(A) for AY 2005-06.

Analysis:
1. Background of the Case: The appellant, a manufacturing facility owner, had two units, with one showing a loss and the other claiming deduction under section 80IB. The AO re-allocated expenses between the units, reducing the deduction claim from ?57,55,175 to ?7,90,631. The penalty was imposed by the AO on this disallowance.

2. Assessee's Submission: The assessee contended that the expenses were allocated based on a certificate from a Chartered Accountant in form 10CCB. The claim was made in good faith, and the AO's reallocation was based on his interpretation, not on any false information provided by the assessee.

3. CIT(A)'s Decision: The CIT(A) held that there was no concealment of income or furnishing of inaccurate particulars. The claim was based on a genuine difference of opinion and the certificate from the CA. The CIT(A) referred to relevant case laws to support the decision.

4. ITAT's Analysis: The ITAT noted that the AO did not prove any expenses were false or bogus. The reallocation exercise involved guesswork, and the assessee's claim was based on professional advice. The ITAT found no concealment or inaccurate particulars furnished by the assessee.

5. Legal Precedents: The ITAT referenced the Supreme Court judgment in Reliance Petroproducts Pvt Ltd case, stating that a claim not sustainable in law does not constitute inaccurate particulars. It also cited the Chandigarh Bench Tribunal's ruling that a claim based on technical expert opinion does not amount to concealment unless fictitious details are found.

6. Conclusion: Considering the facts and legal positions, the ITAT upheld the CIT(A)'s decision to delete the penalty. The ITAT dismissed the Revenue's appeal, confirming the CIT(A)'s order.