ITAT Delhi: Penalty deleted under sec 271(1)(c) as no inaccurate particulars furnished. Disallowance not = penalty.

The ITAT Delhi dismissed the Revenue's appeal and upheld the decision to delete the penalty imposed under section 271(1)(c) as the assessee did not furnish inaccurate particulars. The ITAT emphasized that the mere disallowance of certain claims does not automatically warrant a penalty under the said section. The judgment was pronounced on 11th April, 2014.

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Issues:
1. Penalty imposed under section 271(1)(c) for inaccurate particulars.

Detailed Analysis:
The appeal before the Appellate Tribunal ITAT Delhi pertained to the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961 for the assessment year 2006-07. The primary issue raised by the Revenue was whether the CIT(A) erred in deleting the penalty by holding that the assessee did not furnish inaccurate particulars. The Assessing Officer had levied a penalty of Rs. 70,19,223 based on disallowances under various sections. The CIT(A) canceled the penalty citing the decision of the Honorable Supreme Court in the case of CIT Vs. Reliance Petroproducts Pvt. Ltd. The Revenue challenged this decision before the ITAT, arguing that the penalty should not have been deleted.

The facts of the case revealed that the assessee, a UK-incorporated company, initially declared a loss of Rs. 7,96,49,700, which was later determined by the Assessing Officer at Rs. 54,51,48,532 due to certain disallowances. It was noted that while some disallowances were made, the set-off provided by the Assessing Officer for preceding year disallowances exceeded the current year's disallowances, resulting in a higher determined loss than the one declared. The disallowances were primarily related to the failure of the assessee to deduct and pay taxes on time, and certain expenses were disallowed due to lack of substantiation. The ITAT observed that there was no allegation of inaccurate particulars or false details furnished by the assessee. Relying on the Supreme Court's decision, the ITAT upheld the CIT(A)'s order, emphasizing that the mere disallowance of certain claims does not automatically warrant a penalty under section 271(1)(c).

Ultimately, the ITAT dismissed the Revenue's appeal, affirming the decision to delete the penalty imposed under section 271(1)(c) as the assessee did not furnish inaccurate particulars. The judgment was pronounced on 11th April, 2014, by the ITAT Delhi.

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