2017 (9) TMI 169 - HC - Income Tax

Penalty u/s. 271(1)(c) - rejection of claim of deduction - inaccurate claim - Held that - The assessee had raised a certain claim of deduction. Though this claim was rejected, it was found that the assessee had not supplied inaccurate particulars of the income. The Tribunal therefore referred to the decision of the Supreme Court in case of CIT vs. Reliance Petroproducts Pvt. Ltd. 2010 (3) TMI 80 - SUPREME COURT and held that merely because a claim has been rejected, that by itself would not mean that penalty should also attach. - Decided in favour of assessee.

Summary

Issues:
1. Appeal against the judgment of the Income Tax Appellate Tribunal regarding the cancellation of penalty under section 271(1)(c) of the Income Tax Act.
2. Interpretation of law and facts in upholding the order of the CIT (A) and deleting the penalty.

Issue 1:
The case involved an appeal by the Revenue against the judgment of the Income Tax Appellate Tribunal regarding the cancellation of a penalty under section 271(1)(c) of the Income Tax Act. The Assessing Officer had initially levied the penalty, which was later deleted by the Appellate Commissioner. The Tribunal upheld the view of the CIT (A) and dismissed the appeals by the Revenue. The Tribunal emphasized that the assessee did not supply inaccurate particulars of income, even though a claim for deduction was rejected. Citing the decision of the Supreme Court in the case of CIT vs. Reliance Petroproducts Pvt. Ltd., the Tribunal concluded that the mere rejection of a claim does not justify the levy of a penalty under section 271(1)(c) of the Act. The Tribunal found no error or infirmity in the CIT (A)'s findings, leading to the dismissal of the appeals by the Revenue.

Issue 2:
The second issue revolved around the interpretation of law and facts by the Appellate Tribunal in distinguishing the facts of the assessee from those examined by the Supreme Court in the case of Mak Data Pvt. Ltd. vs. CIT. The Tribunal, in confirming the order of the CIT (A) and deleting the penalty, highlighted that the assessee had not filed inaccurate particulars of income. By referencing the decision of the Supreme Court in the case of CIT vs. Reliance Petroproducts Pvt. Ltd., the Tribunal reiterated that the rejection of a claim does not automatically warrant the imposition of a penalty under section 271(1)(c) of the Income Tax Act. The Tribunal's decision was further supported by a previous ruling in a similar case involving the same assessee. Consequently, the Tax appeal was dismissed, emphasizing that no question of law arose from the discussions and findings presented in the case.