TMI Blog2022 (12) TMI 304X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not attract the penalty u/s 271(1)(c) of the Act. In Pr. CIT vs. Sesa Goa Ltd. [ 2021 (8) TMI 227 - BOMBAY HIGH COURT] , The Hon ble Bombay High Court held that an erroneous claim simplicitor does not automatically attract penalty and it is only when an erroneous claim is based on a deliberate misrepresentation of facts or deliberate suppression of relevant material facts that penalty is imposed after deduction is denied. In the backdrop of the principles of law as set out in the above precedent, it would be obvious that on facts none of the disallowance / addition justifies levy of penalty u/s 271(1)(c) for furnishing inaccurate particulars of its income. It is not in dispute that Tonnage Tax Scheme applies to the assessee as held by the Hon ble Delhi High Court in assessee s case [ 2012 (11) TMI 594 - DELHI HIGH COURT] pertaining to preceding years which has been followed by the Tribunal for AY 2013-14 as well. If that be so any disallowance u/s 14A would automatically be allowable while computing income under the Tonnage Tax Scheme. Moreover, since all details have been disclosed and no inaccuracy has been pointed out by the Revenue, it cannot be said that any inaccurate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Revenue has taken the following ground:- Whether the Ld. CIT(A) has erred in facts and in law in deleting the penalty under section 271(1)(c) of Rs. 55,58,014/- without considering the fact the assessee company has furnished inaccurate particulars of income while furnishing Income Tax Return for the year under consideration . 3. The relevant facts are these. The assessee company is engaged in the business of shipping and storage. For AY 2013-14 the assessee filed its return electronically on 28.09.2013 declaring income of Rs. 4,31,10,420/-. The Ld. Assessing Officer ( AO ) completed the assessment on 30.11.2015 determining the total income at Rs. 88,28,58,120/- including therein certain additions / disallowances. He initiated penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961 (the Act ). On appeal by the assessee before the Ld. CIT(A) the disallowance of Rs. 89,89,571/- on account of section 14A; addition of Rs. 2,00,000/- on account of provision for gratuity, addition of Rs. 57,38,564/- on account of difference in 26AS and addition of Rs. 22,02,437/- on account of short term capital gain were confirmed by the Ld. CIT(A) vide his appellate order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ITAT order that the Deep Sea Matdrills owned by the appellant were to be considered as 'qualifying ships' in accordance with section 115VD. The question that arises, therefore, is whether any disallowance made u/s 14A is mandated as the same would automatically enhance the income of the appellant but the same would, in any case, be exempt under the provisions of Chapter XIIG. It is claimed that the Bombay ITAT in the case of Varun Shipping Co. Ltd. (144 TTJ 286) has upheld the stand of the assessee in this regard. Since the major part of the income is derived from shipping business, any disallowance u/s 14A would automatically be allowable while computing income under the tonnage scheme. I find that the CIT(A) for the A.Y. 2007-08 in appeal no. 119/2009-10 has relied on the Delhi High Court's decision in the case of Sh. Ram Pistons and Rings Ltd. in giving direction to the AO while sustaining the addition made u/s 14A, that the benefit of tonnage tax scheme may be given on the finally determined income. The department, as per the appellant, has mot Challenged this particular finding of the CII(A) before ITAT. For the A.Y. 2008-09 also, the disallowance u/s 14A has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er not shown as income. It is also seen that there was no intention to conceal any such particulars. In the case of Reliance Petro Products, reported in 322ITR 158, the Hon'ble Supreme Court has held that ...We must hasten to add here that in this case, there is no finding that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under Section 271(l)(c) of the Act. A mere making of the claim, which is not sustainable in laws, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the Return cannot amount to the inaccurate particulars. 6.9 In various case laws it has been held that mere disallowance of claim will not automatically result into imposition of penalty. In the case of Price Waterhouse Coopers Pvt Ltd., 25 taxmann.com 400(SC), the Hon'ble Supreme Court has held that if the information has been disclosed in the tax audit report then merely because it is disallowed it cannot be considered as furnishing inaccurate particulars of income or attempting to conceal its in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e error and derived support from the decision in Price Waterhouse Coopers (P) Ltd. vs. CIT (2012) 25 taxmann.com 400 (SC) wherein it is held that bonafide error or an inadvertent mistake would not attract penalty under section 271(1)(c) of the Act. 8. We have carefully considered the rival submissions and perused the material in the records. Perusal of the penalty order dated 28.03.2017 would reveal that the penalty proceedings were initiated on the ground that the assessee had furnished inaccurate particulars of its income. In CIT vs. Reliance Petroproducts (P) Ltd. (2010) 322 ITR 158 (SC) the phrase inaccurate particulars of the income came up for consideration before the Hon ble Supreme Court wherein their Lordships observed that as per Law Lexicon, the meaning of the word particular is a detail or details (in plural sense); the details of a claim or the separate items of an account. Therefore, the word particulars used in section 271(1)(c) would embrace the meaning of the details of the claim made. The Hon ble Supreme Court further observed that the word inaccurate has been defined in Webster s Dictionary as not accurate, no exact or correct; not according to truth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AS is concerned, the explanation of the assessee may not be convincing but the facts remain that the amount of deposits have duly been reflected in assessee s books of account and a bonafide mistake on the part of the accountant not to tally the interest calculation with Form 26AS cannot lead to the conclusion that the assessee furnished inaccurate particulars of its income so as to justify levy of penalty under section 271(1)(c) of the Act. 12. Lastly, declaration of long term capital gain instead of short term capital gain has been accepted by the Ld. CIT(A) due to error. As held by the Hon ble Bombay High Court in the case of Sesa Goa Ltd. (supra) an erroneous claim simplicitor does not automatically attract penalty unless there is deliberate misrepresentation of facts which has not been found in the case of the assessee and the error was rectified during assessment proceedings itself. 13. The Ld. CIT(A) has finally recorded a finding of fact that on the facts and in the circumstances of the case and in law, the impugned penalty is not imposable. We are inclined to concur with his findings. Accordingly, the appeal of the Revenue is rejected. 14. In the result, the Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X
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