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. The Revenue's appeal against the deletion of the penalty of Rs. 2,87,115/- was dismissed, as the Tribunal found the issue regarding the deduction claim to be debatable and not warranting a penalty. It was determined that the claim was genuine, and there was no evidence of falsity or inaccuracy in the information provided. The Tribunal referenced the decision in Reliance Petroproducts Ltd. to support its conclusion.

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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.

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