2017 (11) TMI 682 - HC - Income Tax

High Court affirms deletion of penalty under Income Tax Act, supports deduction claim.

Pr. Commissioner of Income Tax-Central, Jaipur Versus Smt. Renu Agarwal

Pr. Commissioner of Income Tax-Central, Jaipur Versus Smt. Renu Agarwal - TMI Issues:1. Penalty deletion under section 271(1)(c) of the Income Tax Act, 1961.Analysis:The appellant challenged the Tribunal's decision to dismiss the appeal regarding the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961. The Tribunal observed that the appellant's claim for deduction under section 80IB was bona fide and based on expert advice, supported by a legal document named 'Development Agreement.' The appellant withdrew the claim to avoid prolonged litigation, filed a revised return, and paid due taxes. The Tribunal noted that the penalty was imposed for furnishing inaccurate particulars of income, but the claim was based on expert advice and certification. The Tribunal also referred to legal precedents where inadvertent and bona fide errors did not amount to concealment. Additionally, it was highlighted that no penalty was sustainable under section 271AAA of the Act based on the facts of the case. The Tribunal concluded that the penalty could not be sustained and hence deleted.The Tribunal further analyzed the case's facts, where the appellant purchased agricultural land, converted it into residential and commercial plots, and claimed deductions under section 80IB for a joint venture project. The appellant later withdrew the claim to avoid disputes with the tax department. The assessing officer imposed a penalty under section 271(1)(c) for intentionally furnishing inaccurate particulars of income. However, the Tribunal noted that the appellant's actions were based on expert advice, and the revised return was validly filed within the stipulated time. The Tribunal referred to legal judgments supporting the appellant's position and concluded that no penalty could be imposed for claiming exemptions based on professional advice. The Tribunal concurred with the CIT(A)'s decision to cancel the penalty, emphasizing that the appellant had provided explanations and evidence supporting the commercial nature of the transactions. Consequently, the Tribunal dismissed the appeal filed by the Revenue, stating that no substantial question of law arose, and upheld the decision to delete the penalty.Therefore, the High Court upheld the Tribunal's decision to delete the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961, based on the facts and legal analysis presented in the case.