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2019 (6) TMI 1217 - AT - Income TaxPenalty u/s. 271(1)(c) - claim of deduction u/s 80IB(10) - whether the claim made by the assessee in the return of income was on bonafide consideration or not? - HELD THAT - Assessee had shifted its unit from one place to another and that 80% of the cost of plant and machinery on the new factory was by way of acquiring new plant and machinery and only less than 20% of cost was towards transferring plant and machinery of the unit. The assessee was under the impression that it was entitled to benefit under section 80IA and it also obtained professional advise in this regard. The claim of the assessee for deduction under section 80IA came to be rejected in the quantum assessment proceedings. In the penalty proceedings Tribunal noted that there was no suppression of facts or misrepresentation of facts by the assessee even when the claim was denied in the quantum assessment proceedings. It deleted the penalty imposed u/s 271(1)(c) which was affirmed in the case of Petels Engineers Limited 2013 (11) TMI 1374 - BOMBAY HIGH COURT specifically noted that the claim of the assessee under section 80IA was made under a bonafide belief and therefore penalty under section 271(1)(c) was not sustainable. In our considered view the fact situation before us is quite similar to the fact situation before the Hon ble Bombay High Court in the case of Petels Engineers Limited (supra) and therefore levy of penalty in the instant case is not justified on this count too. We hold so. - Decided in favour of assessee.
Issues Involved:
- Imposition of penalty under section 271(1)(c) of the Income Tax Act, 1961 for wrong claim of deduction u/s.80IB(10) - Dispute over the justification of penalty imposition by the Assessing Officer and confirmation by CIT(A) - Assessment of whether the claim made in the return of income was on a bonafide consideration - Examination of whether the penalty under section 271(1)(c) is merited in the given circumstances Detailed Analysis: 1. Imposition of Penalty under Section 271(1)(c): The appeal pertains to the Assessment Year 2013-14, challenging the penalty imposed under section 271(1)(c) by the Assessing Officer for a wrong claim of deduction u/s.80IB(10) of the Income Tax Act. The claim was denied due to the project approval date post 31.3.2008. The penalty was upheld by CIT(A) and contested by the appellant. 2. Dispute Over Penalty Justification: The appellant argued that the denial of deduction does not automatically warrant a penalty under section 271(1)(c) as the claim was made in good faith. The appellant maintained that there was no intention to evade tax, evident from the payment of MAT and additional tax post-disallowance. The Revenue contended that the incorrect claim justified the penalty imposition. 3. Assessment of Bonafide Consideration: The Tribunal analyzed whether the claim made by the appellant was on a bonafide consideration, considering the approval date discrepancy. Despite the error in claiming the deduction, it was observed that no deliberate concealment or inaccurate particulars were involved. The Tribunal emphasized that the claim was a mistake and not an attempt to evade taxes. 4. Merits of Penalty Imposition: Referring to relevant legal precedents, including the Supreme Court and Bombay High Court judgments, the Tribunal concluded that the penalty under section 271(1)(c) was not justified in this case. Drawing parallels to similar situations where penalties were not imposed due to bonafide beliefs, the Tribunal held that the penalty in the present case was unwarranted. 5. Conclusion and Decision: Ultimately, the Tribunal allowed the appeal filed by the assessee, overturning the penalty imposed under section 271(1)(c). The Tribunal emphasized that the facts did not support the imposition of the penalty, and therefore, the appellant's contentions were upheld. The alternative grounds raised by the appellant were not addressed as the penalty was already deleted. This comprehensive analysis delves into the core issues of the case, examining the justification for the penalty imposition and the bonafide nature of the appellant's actions, ultimately leading to the decision in favor of the assessee.
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