TMI Blog2012 (9) TMI 589X X X X Extracts X X X X X X X X Extracts X X X X ..... Pilkhuwa Development Authority, constituted under the U.P. Urban Planning and Development Act, 1973 is a local authority, a mere wrong description of the status should not have been a ground to award penalty. No error in the findings of CIT (A) and ITAT that there was no declaration of inaccurate particulars. Even if the mens rea may not be necessary, in attracting the penalty, the ratio of the judgment of the Supreme Court in CIT v. Reliance Petroproducts Pvt. Ltd. (2010 (3) TMI 80 - SUPREME COURT) wherein it is held that A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee supports the conclusions of the CIT (A) and ITAT that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the assessee had wrongly disclosed its status. Under Section 2 (31) (iv) of Income Tax Act, 1961, the local authority is included in the definition, in the categories of person. The Hapur-Pilkhuwa Development Authority was established under the Uttar pradesh Urban Planning Development Act, 1973, as a local authority. The assessee had deliberately disclosed its status as AJP so as to claim the losses, which were not due to it. The AO consequently imposed a penalty of Rs. 12, 10, 000/- under Section 271 (1) (c) of the Act. 5. The CIT (A) allowed the appeal on the grounds that when the assessee-appellant was asked to explain by the AO, as to how the status of local authority has been claimed as AJP, the hearing was adjourned and a revi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M. Soni 276 ITR 156. The Tribunal found that the AO had considered the assessee as local authority. The filing of revised return was a result of deductions made by the AO. The change of returned loss was not as a result of any query raised by the AO, but rather appears to be the result of notification of Ministry of Avas Town Planning regarding infrastructure fund utilization which was not taken cognizance while preparing the original balance sheet. The change in the balance sheet was brought by the assessee to give effect to the notification and not for the reason of malafide intention. No material has been brought on record by the revenue to suggest that such findings of CIT (A) are contrary to the record. If it is so, then the change b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct claim would not by itself amount to furnishing inaccurate particulars. The Supreme Court thereafter explained its judgment in Dilip N. Shroff v. CIT, (2007) 6 SCC 329 in which the terms 'concealment of income' and furnishing 'inaccurate particulars', the Court held that in order to attract the penalty under Section 271 (1) (c) mens rea was necessary as according to the Court the word 'inaccurate' signified a deliberate act or omission on behalf of the assessee. It was held that Clause (iii) of Section 271 (1) provide for a discretionary jurisdiction upon the assessing authority, in as much as the amount of penalty could not be less than the amount of tax sought to be evaded by reason of such concealment or price of income, but it may not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that making incorrect claim for expenditure on interest does not mean that the return was found to be incorrect or erroneous or false. A mere making of the claim, which is not sustainable in law, by itself will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim in the return cannot amount to inaccurate particulars. 11. In the present case the income tax authorities have found that wrong description of the status of the assessee, which was corrected immediately by filing revised return, and in which the loss was reduced on account of a notification issued by the Ministry of Awas and Town Planning, could not be treated as furnishing inaccurate particulars to attract the penalty clause under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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