Tribunal overturns penalty for incorrect tax deduction claim

The Tribunal ruled in favor of the appellant in an appeal against a penalty imposed under section 271(1)(c) of the Income Tax Act 1961 for an incorrect claim of deduction under section 80IB(10). The appellant's penalty was deleted as the incorrect claim was voluntarily corrected, following the precedent set by the Supreme Court in Reliance Petro-products (P) Ltd. It was held that making an incorrect claim does not amount to furnishing inaccurate particulars, and therefore, the penalty was not leviable. The appellant's appeal was allowed, and the penalty was deleted.

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Issues involved: Appeal against penalty u/s 271(1)(c) imposed for incorrect claim of deduction u/s 80IB(10) of Income Tax Act 1961.

Summary:
1. The appellant filed an appeal against the penalty imposed by the CIT(A)- III, Pune for the A.Y. 2005-06, under section 271(1)(c) of the Income Tax Act 1961, related to the claim of deduction u/s 80IB(10).

2. The appellant initially claimed a deduction of &8377; 22,37,878/- u/s 80IB(10) in the return of income, which was later sought to be revised u/s 139(5) by withdrawing the claim. However, the revised return was filed beyond the permitted period, leading to the assessment being completed based on the original return. The penalty was imposed for furnishing inaccurate particulars. The appellant argued that the penalty should be deleted as the incorrect claim was voluntarily corrected. Citing the Supreme Court decision in Reliance Petro-products (P) Ltd, it was contended that making an incorrect claim does not amount to furnishing inaccurate particulars. The penalty was deleted based on this argument.

3. After hearing both parties and considering the case laws, the Tribunal found that the penalty was not leviable as the incorrect claim did not constitute furnishing inaccurate particulars. Relying on the Supreme Court judgment in Reliance Petroproducts Ltd, it was concluded that claiming a deduction not accepted by the revenue does not attract penalty u/s 271(1)(c). Therefore, the penalty was deleted, and the appellant's appeal was allowed.

Judges' names: Shri I.C. Sudhir (JM) and Shri D. Karunakara Rao (AM)

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