2016 (9) TMI 1462 - AT - Income Tax

Tribunal rules incorrect claim for exemption not inaccurate particulars; penalty overturned.

The Tribunal overturned the penalty imposed under Section 271(1)(c) for claiming exemption under Section 54/54F. Despite the incorrect claim, the Tribunal ... Penalty u/s 271(1)(c) - false claim before the assessing officer under Section 54/54F in the assessment proceeding - mere making of claim - Held that:- If it is considered that the claim made by the assessee under Section 54/54F is incorrect, it would not tantamount to furnishing of inaccurate particulars of income. Penalty can be levied only in respect of concealing the particulars of income or furnishing inaccurate particulars. Making a claim before the assessing officer under the statutory provisions cannot be considered by any stretch of imagination that the assessee has concealed any part of the income or furnished inaccurate particulars of income. This Tribunal is of the considered opinion that merely because claim made by the assessee under Section 54/54F was disallowed by the assessing officer in the assessment proceeding, that cannot be a reason to conclude that the assessee has furnished inaccurate particulars of his income or concealed any part of his income.Penalty levied by the assessing officer under Section 271(1)(c) is not justified. - Decided in favour of assessee Issues:Penalty under Section 271(1)(c) for claiming exemption under Section 54/54F - Furnishing inaccurate particulars of income.Analysis:The appeal was against the order of the CIT(A) confirming the penalty levied under Section 271(1)(c) for claiming exemption under Section 54/54F. The assessee sold land and claimed exemption, but the assessing officer disallowed the claim, alleging inaccurate particulars. The assessee disclosed the source of inheritance and investment in a residential house. The assessing officer found discrepancies, leading to the penalty.The assessee argued that disclosing all details and making a claim does not imply furnishing inaccurate particulars. Citing the Apex Court's judgment, it was asserted that incorrect claims do not equate to inaccurate particulars. The Madras High Court's ruling emphasized the conditions necessary for penalty under Section 271(1)(c). The Tribunal noted that mere disallowance of a claim does not prove inaccurate particulars or concealment of income.After reviewing the facts and legal precedents, the Tribunal concluded that the penalty was unjustified. The assessee's claim under Section 54/54F, though incorrect, did not constitute furnishing inaccurate particulars. The Tribunal set aside the lower authorities' orders and deleted the penalty, allowing the assessee's appeal.