2018 (7) TMI 750 - AT - Income Tax

Penalty u/s 271(1)(c) - assessee guilty of furnishing inaccurate particulars of income with regard to claim for depreciation disallowed in the assessment - Held that - No finding whatsoever on the part of the Revenue authorities below that any detail supplied by the assessee in his return of income is found to be incorrect and erroneous or false. It is also not in dispute that the disallowance of depreciation has been accepted by the assessee. It is also not in dispute that the assessee claimed bonafide mistake in making excess claim of depreciation. AO has failed to make out the case of concealment of income or furnishing of inaccurate particulars of such income by the assessee, so as to attract the provisions contained u/s 271(1)(c) of the Act, hence penalty levied by the AO and confirmed by the Ld. CIT(A) is hereby ordered to be deleted - Even at the time of issuance of the notice as well as at the time of passing the penalty order, AO was not clear, as to whether the penalty proceedings are being initiated for concealment of the particulars of income or furnishing inaccurate particulars of income , rather the assessee has been charged for having concealed the particulars of income as well as furnishing inaccurate particulars of such income - Decided in favour of assessee

Summary

Issues:
1. Penalty imposed under section 271(1)(c) for claiming excess depreciation.
2. Determination of whether the assessee concealed income or furnished inaccurate particulars during assessment proceedings.

Analysis:
Issue 1:
The case involved a penalty imposed under section 271(1)(c) for claiming excess depreciation. The Assessing Officer (AO) initiated penalty proceedings after the completion of the assessment under section 143(3) of the Income Tax Act, 1961. The AO treated the excess depreciation claim as furnishing inaccurate particulars of income and levied a penalty. The assessee contested the penalty before the Ld. CIT(A), who deleted the penalty on one disallowed amount but confirmed it on the excess depreciation claim. The matter was then brought before the Tribunal by the assessee through the present appeal.

Issue 2:
The main issue for determination was whether the assessee concealed income or furnished inaccurate particulars during the assessment proceedings. The Tribunal referred to the interpretation of section 271(1)(c) by the Hon'ble Supreme Court in the case of CIT vs. Reliance Petro Products Pvt. Ltd. The Court held that for a penalty to be imposed, there must be concealment of income or furnishing of inaccurate particulars. Mere incorrect claims, if not found to be inaccurate, do not attract the penalty provision. The Tribunal noted that there was no finding by the Revenue authorities that the details supplied by the assessee were incorrect or false. The notice issued by the AO also lacked clarity on whether the penalty was for concealment or furnishing inaccurate particulars. The Tribunal cited a decision by the Hon'ble High Court of Karnataka and upheld that the penalty was not justified in this case.

In conclusion, the Tribunal found that the AO failed to establish concealment or furnishing of inaccurate particulars by the assessee, as required under section 271(1)(c). Therefore, the penalty imposed by the AO and confirmed by the Ld. CIT(A) was ordered to be deleted, and the appeal filed by the assessee was allowed.