2012 (2) TMI 71 - AT - Income Tax

Tribunal cancels penalty under Income-tax Act for Professor's good faith claim

The Tribunal canceled the penalty imposed on the assessee under section 271(1)(c) of the Income-tax Act, 1961 for the assessment year 2006-07. The ... Penalty under section 271(1)(c) - deduction under section 80G - allowability on cash sums and not on fixed assets - bonafide mistake versus furnishing inaccurate particulars - making an incorrect claim not necessarily furnishing inaccurate particularsPenalty under section 271(1)(c) - bonafide mistake versus furnishing inaccurate particulars - making an incorrect claim not necessarily furnishing inaccurate particulars - Whether penalty under section 271(1)(c) could be sustained for claim of deduction under section 80G made in revised return where donation was in the form of immovable property and the claim was held unsustainable - HELD THAT: - The Tribunal found that the assessee did not claim the deduction in the original return but filed a revised return claiming deduction under section 80G after being advised by colleagues; she is a lay person and filed the return herself without legal assistance. The assessee produced a certificate from the Trust to show donation to an 80G-registered Trust and enclosed that certificate with the revised return. The Tribunal applied the principle in CIT Vs. Reliance Petro Products Pvt. Ltd. that an incorrect claim does not ipso facto amount to furnishing inaccurate particulars of income and that penalty under section 271(1)(c) can be levied only where particulars in the return are found to be incorrect, false or erroneous. On the facts, the Tribunal concluded the claim was a bonafide mistake - a legal error as to allowability of deduction for immovable property - and there was no finding that the particulars furnished were false or untrue. Consequently, the conditions for invoking penalty were not made out and the penalty confirmed by the lower authorities was cancelled. [Paras 4, 5]Penalty levied under section 271(1)(c) set aside on ground of bonafide mistake and absence of inaccurate particulars; appeal allowed.Final Conclusion: Penalty sustained by the Assessing Officer and CIT(A) under section 271(1)(c) was cancelled by the Tribunal for AY 2006-07 on finding that the assessee's revised claim under section 80G was a bonafide mistake and did not amount to furnishing inaccurate particulars of income. Issues:Levy of penalty under section 271(1)(c) of the Income-tax Act, 1961 for assessment year 2006-07 based on inaccurate particulars of income furnished by the assessee.Analysis:The case involved an appeal by the assessee against the order of the ld. CIT (A)-II, Jaipur, sustaining the penalty of Rs.43,359/- under section 271(1)(c) of the Income-tax Act, 1961. The assessee had initially filed a return of income declaring Rs.3,20,028/-, later revising it to claim a deduction under section 80G for a property gifted to a Trust. The assessing officer (AO) disallowed the deduction, leading to the initiation of penalty proceedings. The AO and the ld. CIT(A) upheld the penalty, citing inaccurate particulars of income furnished by the assessee. The Tribunal noted that the assessee, a Professor of Hindi, revised the return based on advice from colleagues regarding the entitlement to deduction under section 80G for gifts to a Trust. The Tribunal found that the assessee acted bonafide in revising the return without legal assistance, indicating a lack of awareness regarding the legal provisions. The Tribunal emphasized that the assessee submitted a gift certificate from the Trust along with the revised return, demonstrating the claim's legitimacy. Citing the Hon'ble Supreme Court's decision in CIT Vs. Reliance Petro Products Pvt. Ltd., the Tribunal concluded that the assessee's actions did not amount to furnishing inaccurate particulars of income. The Tribunal held that the penalty levied by the lower authorities was unjustified and canceled it, allowing the assessee's appeal.In conclusion, the Tribunal's decision revolved around the bonafide nature of the assessee's actions in revising the return to claim a deduction under section 80G, emphasizing the lack of inaccurate particulars furnished. The Tribunal's analysis highlighted the importance of the genuineness of the claim and the absence of deliberate misrepresentation in determining the justification for the penalty under section 271(1)(c) of the Income-tax Act, 1961.