ITAT upholds deletion of penalty under section 271(1)(c) for AY 2005-06

The ITAT upheld the CIT(A)'s decision to delete the penalty under section 271(1)(c) of the Income Tax Act, 1961 for AY 2005-06. The ITAT found that the expenses reallocation by the AO was not supported by evidence of false information provided by the assessee. The claim was made in good faith based on professional advice and a certificate from a Chartered Accountant. Citing legal precedents, the ITAT concluded that the claim, even if not sustainable in law, did not amount to furnishing inaccurate particulars. The ITAT dismissed the Revenue's appeal, affirming the CIT(A)'s order.

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Issues:
- Appeal against deletion of penalty under section 271(1)(c) of the Income Tax Act, 1961 by the CIT(A) for AY 2005-06.

Analysis:
1. Background of the Case: The appellant, a manufacturing facility owner, had two units, with one showing a loss and the other claiming deduction under section 80IB. The AO re-allocated expenses between the units, reducing the deduction claim from Rs. 57,55,175 to Rs. 7,90,631. The penalty was imposed by the AO on this disallowance.

2. Assessee's Submission: The assessee contended that the expenses were allocated based on a certificate from a Chartered Accountant in form 10CCB. The claim was made in good faith, and the AO's reallocation was based on his interpretation, not on any false information provided by the assessee.

3. CIT(A)'s Decision: The CIT(A) held that there was no concealment of income or furnishing of inaccurate particulars. The claim was based on a genuine difference of opinion and the certificate from the CA. The CIT(A) referred to relevant case laws to support the decision.

4. ITAT's Analysis: The ITAT noted that the AO did not prove any expenses were false or bogus. The reallocation exercise involved guesswork, and the assessee's claim was based on professional advice. The ITAT found no concealment or inaccurate particulars furnished by the assessee.

5. Legal Precedents: The ITAT referenced the Supreme Court judgment in Reliance Petroproducts Pvt Ltd case, stating that a claim not sustainable in law does not constitute inaccurate particulars. It also cited the Chandigarh Bench Tribunal's ruling that a claim based on technical expert opinion does not amount to concealment unless fictitious details are found.

6. Conclusion: Considering the facts and legal positions, the ITAT upheld the CIT(A)'s decision to delete the penalty. The ITAT dismissed the Revenue's appeal, confirming the CIT(A)'s order.

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