2011 (3) TMI 1642 - AT - Income Tax

Tax Tribunal Upholds Deletion of Penalty for Income Tax Act Violation

The Tribunal upheld the decision of the Commissioner of Income Tax (Appeals) to delete the penalty imposed under section 271(1)(c) of the Income Tax Act. ... Penalty for concealment of income under section 271(1)(c) of the Income-tax Act - deduction under section 80IB - difference of opinion on admissibility of deduction - absence of finding of furnishing inaccurate particulars or false material - principle that an unsustainable claim does not amount to furnishing inaccurate particulars (Reliance Petroproducts)Penalty for concealment of income under section 271(1)(c) of the Income-tax Act - deduction under section 80IB - difference of opinion on admissibility of deduction - absence of finding of furnishing inaccurate particulars or false material - principle that an unsustainable claim does not amount to furnishing inaccurate particulars (Reliance Petroproducts) - Whether levy of penalty under section 271(1)(c) was sustainable where deduction under section 80IB was disallowed on a difference of opinion and there was no finding of false particulars or bogus claim. - HELD THAT: - The Tribunal found that the assessee had claimed deduction under section 80IB in respect of job work and that the disallowance resulted from a difference of opinion rather than any finding that the claim was bogus or that false material was furnished. There was no contention in the penalty order that incorrect details had been furnished in the return. Applying the legal principle affirmed in Reliance Petroproducts, where no particulars supplied in the return are found to be incorrect or false, making a claim which is unsustainable in law does not amount to furnishing inaccurate particulars to attract section 271(1)(c). On that basis the Tribunal upheld the Commissioner (Appeals)'s deletion of the penalty. [Paras 2]Penalty under section 271(1)(c) deleted as levy was unsustainable where deduction was disallowed due to a debatable difference of opinion and there was no finding of inaccurate particulars.Final Conclusion: Revenue's appeal dismissed; the deletion of the penalty under section 271(1)(c) is confirmed. Issues involved: Appeal against deletion of penalty u/s 271(1)(c) of the Income Tax Act.Summary:The appeal was filed by the Revenue challenging the deletion of penalty of Rs. 2,87,115/- imposed u/s 271(1)(c) by the Commissioner of Income Tax (Appeals). The assessee firm, engaged in the business of insulated cable, had claimed deduction u/s 80IB for job work. The Tribunal had previously restored the issue back to the file of the CIT (A) for further review. The argument presented was that the issue was debatable and therefore not liable for penalty. It was contended that the deduction claim was genuine and there was no finding of it being bogus in the assessment order. The Revenue did not assert any false material or incorrect details were furnished. Citing the decision of Reliance Petroproducts Ltd., it was concluded that a mere unsustainable claim does not amount to furnishing inaccurate particulars. The Tribunal upheld the CIT (A)'s decision and dismissed the Revenue's appeal.The judgment was pronounced in Open Court on 18/3/2011.