2017 (2) TMI 1108 - AT - Income Tax

Penalty levied u/s 271(1)(c) - assessee has wrongly claimed deduction u/s 80IB - Held that - Where there is no finding that any details supplied by the assessee in its return were found to be incorrect or erroneous or false, there is no question of inviting penalty under section 271(1)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing of inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to inaccurate particulars. In the present case, the assessee had given reason for claiming deduction u/s 80IB. The assessee had correctly disclosed the quantum of investment in plant and machinery in the return of income. The conduct of the assessee clearly show the bona-fide belief that the assessee had about its eligibility for claiming deduction u/s 80IB of the Act. Although vide subsequent notification dated 10.12.1999, the assessee ceased to be SSI undertaking. The assessee had made full disclosure of income in return of income, as well as before the Assessing Officer at the time of assessment proceedings. Therefore, in our considered opinion, it is not a case which would attract levy of penalty. We concur with the findings of Commissioner of Income Tax (Appeals) in deleting the penalty. - Decided in favour of assessee.

Summary

Issues: Appeal against deletion of penalty u/s 271(1)(c) of the Income Tax Act for assessment years 2003-04, 2004-05, and 2005-06.

Analysis:
1. The appeals were filed by the revenue against the order of the Commissioner of Income Tax (Appeals) deleting the penalty levied u/s 271(1)(c) of the Income Tax Act for the mentioned assessment years.

2. The case involved the assessee, engaged in manufacturing printed circuit boards, claiming deduction u/s 80IB as a Small Scale Industrial Unit (SSI). However, the Assessing Officer disallowed the claim as the investment in plant and machinery exceeded the SSI limit.

3. The Department contended that the assessee furnished inaccurate particulars of income by wrongly claiming the deduction, thus justifying the penalty. The Department sought to set aside the order of the Commissioner of Income Tax (Appeals).

4. Despite the absence of representation from the assessee, the appeals were decided based on the Department's submissions and available records.

5. The Tribunal noted that the assessee mistakenly claimed the deduction under a bona fide belief, even though it was not eligible due to exceeding the SSI investment limit. The assessee disclosed the correct investment value, showing a genuine belief in eligibility.

6. Referring to the Supreme Court's decision in CIT v. Reliance Petroproducts P. Ltd, the Tribunal emphasized that making an incorrect claim in law does not amount to furnishing inaccurate particulars unless the details supplied are found to be false or incorrect. The Tribunal found no grounds for penalty as the assessee disclosed the investment accurately.

7. Considering the full disclosure of income and the genuine belief held by the assessee, the Tribunal upheld the Commissioner's decision to delete the penalty, dismissing the Department's appeals for the mentioned assessment years.

Judgment: The impugned order deleting the penalty u/s 271(1)(c) for the assessment years 2003-04, 2004-05, and 2005-06 was upheld, and the Department's appeals were dismissed.