2013 (11) TMI 221 - HC - Income Tax

Tribunal cancels penalty under Income Tax Act for late claim, upholding assessee's appeal

COMMISSIONER OF INCOME TAX & ASSISTANT COMMISSIONER OF INCOME TAX Versus M/s MAKINO ASIA PVT LTD

COMMISSIONER OF INCOME TAX & ASSISTANT COMMISSIONER OF INCOME TAX Versus M/s MAKINO ASIA PVT LTD - TMI Issues Involved:1. Justification of Appellate Authorities in setting aside the penalty under Section 271(1)(c) of the Income Tax Act, 1961.2. Determination of whether the assessee furnished inaccurate particulars or concealed income for the Assessment year 2002-03, attracting penalty under Section 271(1)(c).Detailed Analysis:1. Justification of Appellate Authorities in Setting Aside the Penalty:The Tribunal confirmed the Appellate Authority's order canceling the penalty levied under Section 271(1)(c). The Appellate Authority reasoned that the assessee's claim for carrying forward the loss, despite being late, was based on the original intimation which did not negate this claim. The Tribunal and the Appellate Authority both relied on the Supreme Court's judgment in Hindustan Steel Ltd. v. State of Orissa, which emphasizes that penalties should not be imposed for technical or venial breaches or where the breach flows from a bona fide belief. The Appellate Authority found no intention to deceive the Assessing Officer, noting that scrutiny assessments were in progress for all relevant years, and the assessee had not withheld any crucial information.2. Furnishing Inaccurate Particulars or Concealing Income:The court examined whether the assessee's act of claiming set-off for the loss carried forward from the assessment year 1998-99 amounted to furnishing inaccurate particulars or concealing income. The assessee was informed by the Assessing Officer that the loss could not be carried forward due to the late filing of the return. Despite this, the assessee claimed the set-off in the revised return for the assessment year 2002-03. The court, referring to the Supreme Court's judgment in Commissioner of Income-Tax vs. Reliance Petroproducts Pvt. Ltd., concluded that making an incorrect claim in law does not amount to furnishing inaccurate particulars. The court emphasized that the details supplied in the return were factually correct, and the claim for set-off was based on the actual loss suffered, not on any fabricated details.The court also referenced the Supreme Court's interpretation in T.Ashok Pai vs. Commissioner of Income-Tax, which clarified that 'inaccurate particulars' must involve false information or non-disclosure of material facts. The court found that the assessee's claim did not meet these criteria, as the particulars were based on the actual loss, and there was no concealment of income.Conclusion:The court concluded that the assessee's act of claiming set-off for the loss carried forward did not amount to either concealment of income or furnishing inaccurate particulars. The claim was based on the actual loss suffered, and the assessee had not withheld any information. Thus, the penalty under Section 271(1)(c) was not justified. The appeal was disposed of in favor of the assessee, answering both substantial questions of law against the revenue.