2014 (9) TMI 1004 - AT - Income Tax

Penalty u/s. 271(1)(c) - exemption u/s. 10B reduced by AO - CIT(A) deleted the penalty - Held that - The claim of exemption u/s. 10B of the Act by the assessee was reduced by the Assessing Officer. So it cannot be said that the assessee concealed the income or furnished the inaccurate particulars of its income. Therefore keeping in view the ratio laid down by the Hon ble Supreme Court in the aforesaid case of CIT Vs. Reliance Petro Product (P) Ltd 2010 (3) TMI 80 - SUPREME COURT we do not see any infirmity in the order of the Ld. CIT(A). Accordingly do not see any merit in this appeal of the department. - Decided in favour of assessee.

Summary

Issues:
1. Appeal against deletion of penalty under section 271(1)(c) of the Income Tax Act, 1961.

Detailed Analysis:

Issue 1: Appeal against Deletion of Penalty under Section 271(1)(c) of the Income Tax Act

The Department appealed against the deletion of penalty by the CIT(A) under section 271(1)(c) of the Income Tax Act. The dispute arose from the claim of exemption under section 10B of the Act by the assessee. The Assessing Officer added a difference amount to the income of the assessee due to discrepancies in the calculation of exemption claimed under section 10B. The CIT(A) directed the Assessing Officer to re-compute the deduction after excluding certain amounts from the turnover. The penalty proceedings were initiated, and the Assessing Officer levied a penalty of Rs. 4,38,596. The CIT(A) later deleted the penalty, stating that the assessee rectified the errors in calculation upon notification by the Assessing Officer. The CIT(A) emphasized the distinction between assessment and penalty proceedings, citing that the findings in assessment cannot be conclusive for penalty imposition. The CIT(A) concluded that there was no deliberate attempt to conceal income or provide inaccurate particulars, hence canceling the penalty.

The Department contended that the assessee's claim for exemption under section 10B was incorrect, justifying the penalty imposition. Conversely, the assessee argued that there was no deliberate concealment or furnishing of inaccurate particulars. The assessee referenced the Supreme Court judgment in CIT Vs. Reliance Petro Product (P) Ltd., emphasizing that an incorrect claim does not equate to furnishing inaccurate particulars. The ITAT, aligning with the Supreme Court's ruling, found no fault in the CIT(A)'s decision to delete the penalty. The ITAT reiterated that the mere making of an unsustainable claim does not amount to furnishing inaccurate particulars. As the Assessing Officer rectified the exemption claim discrepancies, there was no basis to levy the penalty. Consequently, the ITAT dismissed the Department's appeals for both assessment years.

In conclusion, the ITAT upheld the CIT(A)'s decision to delete the penalty under section 271(1)(c) for both assessment years, emphasizing the distinction between incorrect claims and furnishing inaccurate particulars, in line with the Supreme Court's precedent.

This detailed analysis provides a comprehensive overview of the issues involved in the legal judgment, the arguments presented by both parties, and the final decision rendered by the ITAT based on legal principles and precedents cited during the proceedings.