2021 (6) TMI 461 - AT - Income Tax

Levying the penalty u/s.271(1)(c) - deduction u/s.54F of the Act was not correct claim as per observation of the Department - HELD THAT - As assessee had declared the full facts; the full factual matrix or facts were before the AO while passing the assessment order. It is another matter that the claim based on such facts were found to be inadmissible. This is not the same thing as furnishing inaccurate particulars of income as contemplated under Section 271(1) (c). It is settled proposition of the law that a misconceived or wrong claim for deduction or exemption in the return of income filed does not automatically attract penalty under Section 271(1)(c) - Just for making wrong claims made advertently or inadvertently, therefore, penalty cannot be levied u/s.271(1)(c) of the Act and further the Lower Authorities have not given any findings regarding either concealment of income or furnishing of inaccurate particulars of income by the assessee. We are of the considered view, this is not a fit case for imposing penalty - Decided in favour of assessee.

Summary

Issues:
Penalty u/s.271(1)(c) of the Income Tax Act, 1961 for wrong claims made in the return of income without concealment or furnishing inaccurate particulars of income.

Analysis:
The appeal pertains to the imposition of a penalty u/s.271(1)(c) of the Income Tax Act, 1961 on the assessee for incorrect claims made in the return of income for the assessment year 2007-08. The Assessing Officer had levied a penalty of &8377; 9,37,580/- without finding any concealment of income or furnishing of inaccurate particulars of income. The sole reason for the penalty was the incorrect claim made by the assessee for deduction u/s.54F of the Act. During the hearing, the assessee did not appear, and the submissions of the Ld. DR were recorded. The case law of CIT & Anr. v. Manjunatha Cotton and Ginning Factory and CIT v. SSA's Emerald Meadows were cited, emphasizing the need for specific charges in penalty proceedings regarding concealment or furnishing of inaccurate particulars of income. The Hon'ble Supreme Court's decision in CIT Vs. Reliance Petroproducts Pvt. Ltd. was also referenced, highlighting that a wrong claim for deduction does not automatically attract penalty u/s.271(1)(c) unless there is a finding of incorrect or false details supplied by the assessee.

The Tribunal considered the facts that the assessee had disclosed all relevant information, and the Assessing Officer had full knowledge of the factual matrix while passing the assessment order. It was noted that the inadmissibility of the claim did not equate to furnishing inaccurate particulars of income under Section 271(1)(c) of the Act. Relying on the judicial pronouncements, the Tribunal concluded that a misconceived or wrong claim for deduction does not warrant a penalty under Section 271(1)(c) of the Act. Since the Lower Authorities did not establish either "concealment of income" or "furnishing of inaccurate particulars of income" by the assessee, the Tribunal held that this was not a suitable case for imposing a penalty. Consequently, the order of the Ld. CIT(Appeals) was set aside, and the Assessing Officer was directed to delete the penalty imposed on the assessee.

In conclusion, the appeal of the assessee was allowed, and the penalty u/s.271(1)(c) of the Act was revoked based on the absence of concealment or furnishing of inaccurate particulars of income, as per the detailed analysis and legal precedents cited in the judgment.