2012 (5) TMI 673 - AT - Income Tax

Summary

Issues involved: Levy of penalty under Section 271(1)(c) of the Income-tax Act, 1961.

Summary:
The Appellate Tribunal ITAT Delhi considered the appeal by the assessee against the penalty imposed under Section 271(1)(c) of the Income-tax Act, 1961. Initially, the ITAT had quashed the penalty due to the lack of specific satisfaction as required under Section 271(1)(c). The Revenue then appealed to the Delhi High Court, which remanded the matter back to the Tribunal for fresh consideration.

In this case, the Assessing Officer had imposed a penalty under Section 271(1)(c) for two additions/disallowances: (i) income from undisclosed sources amounting to Rs. 3,82,636, and (ii) part disallowance of deduction u/s 80HHC, with a difference of Rs. 50,43,499.

The CIT(A) had deleted the first addition of Rs. 3,82,636 in the quantum appeal, rendering the penalty in relation to this addition invalid. The remaining issue was whether the penalty under Section 271(1)(c) could be imposed for the reduction in the deduction claimed under Section 80HHC. The Tribunal referenced the decision of the Hon'ble Apex Court in CIT Vs. Reliance Petroproducts Pvt.Ltd., where it was held that a claim not sustainable in law does not amount to furnishing inaccurate particulars regarding income.

The Tribunal noted that the claim for deduction under Section 80HHC by the assessee was not found to be unsustainable in law. The Assessing Officer had allowed the deduction but recalculated the quantum claimed. As there was no evidence of incorrect or false details provided by the assessee, the Tribunal, following the Apex Court decision, canceled the penalty under Section 271(1)(c).

Ultimately, the appeal of the assessee was allowed, and the decision was pronounced on 25th May 2012.