2017 (2) TMI 1197 - HC - Income Tax

Penalty under Section 271(1)(c) - claiming the deduction under Section 10A - Held that - For the assessment year under consideration, the assessee had shown the date of commencement of production in Form 56F, as 01.06.1999. The assessee had not concealed the date of production or had not made any mistake in pointing out the same. The authorities, therefore, rightly held that the assessee had not concealed anything and not stated any incorrect particulars of income in the years under consideration. The assessee had claimed the benefit under Section 10A of the Act under a bonafide belief that since the deduction was not claimed under the said provisions for the three assessment years i.e. 2006-07, 2009-10 and 2010-11, the claim for deduction in the year 2010-11, being the 9th or the 10 year, could be claimed. Both the authorities have concurrently found that claiming the deduction under Section 10A of the Act by the assesses was a bonafide mistake and the assessee had not concealed any material facts as the assessee had clearly pointed out the date of commencement of the production in Form No. 56F, as 01.06.1999. The authorities had found that since the mistake committed by the assessee was brought to the assessee s notice, the assessee unconditionally withdrew the said claim and offered the said amount as income of the relevant year and paid the tax on the same. In the present case, the assessee has tendered an explanation which he was able to substantiate and prove to be bona fide before the Commissioner of Income Tax (Appeals). - Decided in favour of assessee.

Summary

Issues:
- Challenge to penalty levied under Section 271(1)(c) of the Income Tax Act.
- Interpretation of Section 10A of the Income Tax Act.
- Bona fide mistake by the assessee in claiming deduction.
- Jurisdiction of Commissioner of Income Tax (Appeals) and Income Tax Appellate Tribunal.

Analysis:
The primary issue in this case pertains to the challenge against the penalty imposed under Section 271(1)(c) of the Income Tax Act. The appellant-Revenue contested the orders of the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal, Nagpur, which held that the Assessing Officer erred in levying a penalty of ?42,00,000 on the respondent-assessee. The key question for consideration was whether the penalty was justified in the circumstances of the case.

Regarding the interpretation of Section 10A of the Income Tax Act, it was found that the respondent-assessee had claimed a deduction of ?1,24,84,297 under this provision. The Assessing Officer disallowed the deduction, leading the assessee to withdraw the claim and offer the amount as income, paying the tax on it. The Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal both held that the assessee's mistake was bona fide, and the penalty under Section 271(1)(c) could not have been imposed.

The jurisdiction of the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal was crucial in determining the outcome of the case. Both authorities concurred that the assessee's claim under Section 10A was based on a genuine belief, supported by the disclosure of production commencement date in Form 56F. The tribunal referenced relevant case law, distinguishing the present case from precedents cited by the Revenue's counsel. The tribunal upheld the findings of the lower authorities, emphasizing the bona fide nature of the assessee's mistake and the absence of concealment or incorrect particulars of income.

Ultimately, the High Court dismissed the appeal, noting that no substantial question of law emerged. The decision was based on the thorough analysis conducted by the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal, which concluded that the penalty imposition was unwarranted given the circumstances of the case. The judgment highlighted the importance of substantiating a bona fide mistake and the significance of factual findings in tax penalty cases.