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2018 (1) TMI 337 - HC - Income TaxPenalty u/s 271(1)(c) - claim for deduction under Section 54 - Held that - The appellant has admittedly made a claim in its return of income which is prohibited under the Act. The claim for deduction under Section 54 of the Act could only be made by individuals or HUF, while the appellant is admittedly a company incorporated under the Companies Act, 1956. Thus this was not a case, where a claim made was debatable or claim being made in the absence of any prohibition to make such a claim under the Act. In the aforesaid cases, one could possibly infer that the claim was made under the bonafide interpretation of the law. In the present facts, this is admittedly not so. In the present facts, the appellant has furnished inaccurate particulars of income by claiming a deduction which is prohibited in case of assessee. Thus the penalty under Section 271 (1) (c) of the Act is imposable upon the appellant. - Decided against assessee.
Issues:
1. Challenge to penalty imposed under Section 271(1)(c) of the Income Tax Act. 2. Claim for exemption under Section 54 considered as a bona fide mistake deserving penalty waiver. Issue 1: Challenge to Penalty Imposed: The appellant, a company engaged in letting out immovable property, claimed benefit under Section 54 of the Income Tax Act for the Assessment Year 2009-2010. However, the Assessing Officer disallowed this claim during assessment proceedings, stating that only individuals and Hindu Undivided Families were eligible for such deductions, not companies. Subsequently, a penalty under Section 271(1)(c) of the Act was imposed on the appellant for furnishing inaccurate particulars of income by making an ineligible claim. The Commissioner of Income Tax (Appeals) upheld this penalty, which was further affirmed by the Tribunal. The High Court noted that the claim made by the appellant was prohibited under the Act, and it was not a debatable issue but a clear violation. Referring to the decision in CIT Vs. Reliance Petroproducts Pvt Ltd., the court emphasized that penalties are applicable when inaccurate particulars are furnished, which was evident in this case. Therefore, the court dismissed the challenge to the penalty, as it was rightfully imposed due to the inaccurate claim made by the appellant. Issue 2: Bona Fide Mistake for Exemption Claim: The appellant argued that the claim for exemption under Section 54 was a bona fide mistake, which should not attract a penalty. However, the Tribunal rejected this argument as no evidence was presented to support the claim of a mistake, especially considering the statutory prohibition against such claims by companies. The appellant relied on the Price Waterhouse Coopers Pvt. Ltd. case to argue against penalty imposition for a silly mistake. Still, the court found that unlike in the Price Waterhouse case where a mistake was evident from the Tax Audit Report, no such evidence was presented in the current case. The court held that the Tribunal's decision to not accept the appellant's explanation was a plausible view, and thus, the argument of a bona fide mistake did not hold. Consequently, the court did not find any substantial legal questions arising from this issue and dismissed the appeal without costs. This judgment from the Bombay High Court dealt with a case where a company wrongly claimed an exemption under Section 54 of the Income Tax Act, leading to the imposition of a penalty under Section 271(1)(c). The court emphasized the importance of accurate reporting of income and upheld the penalty due to the clear violation of the law by the appellant. The court also highlighted the need for evidence to support claims of mistakes, especially when statutory provisions clearly prohibit certain actions.
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