2018 (2) TMI 1205 - AT - Income Tax

Tribunal dismisses penalty for incorrect claims, emphasizing legislative intent

The Tribunal allowed the assessee's appeal, setting aside the CIT(A)'s order and dismissing the revenue's appeal. It held that the penalty under section ... Penalty u/s 271(1)(c) - depreciation claim - Held that:- Assessee had filed complete particulars with respect to assets on which depreciation was claimed. The assessee has also filed chart of fixed assets placed at page No. 3 of the paper book showing claim of the said depreciation. From the above documents itself, the Assessing Officer has observed that the assessee has claimed depreciation to the extent of ₹ 2,57,677/- and therefore, it cannot be said that the assessee had concealed income or had furnished wrong particulars of income. Even if it is presumed that assessee was not eligible for allowance of depreciation even then the penalty u/s 271(1)(c) cannot be imposed as held by Hon'ble Supreme Court in the case of CIT vs. Reliance Petroproducts (P.) Ltd. (2010 (3) TMI 80 - SUPREME COURT) wherein held that every wrong claim made by the assessee cannot tantamount to furnishing of wrong particulars of income or concealment of income - Decided in favour of assessee. Issues:Appeal against penalty under section 271(1)(c) of the Act confirmed by CIT(A).Analysis:The appellant contested the penalty imposed by the Assessing Officer under section 271(1)(c) of the Act, arguing that even though depreciation was disallowed due to no business income, penalty imposition was unwarranted as complete details were provided, relying on the judgment in CIT vs. Reliance Petroproducts (P.) Ltd. The respondent supported the orders of the authorities below.Upon review, the Tribunal found that the appellant had submitted complete particulars of assets for depreciation claim, as evidenced by the balance sheet and profit & loss account. Despite potential ineligibility for depreciation, the Tribunal cited the Supreme Court's ruling that every wrong claim does not amount to furnishing inaccurate particulars of income. The Supreme Court emphasized that inaccuracies must be present in the return filed to invoke penalty under section 271(1)(c), and incorrect legal claims do not constitute inaccurate particulars.The Tribunal highlighted that the revenue's argument of excessive deductions constituting concealment was unfounded, as the appellant had disclosed all expenditure and income details in the return. Merely claiming expenses not accepted by the Assessing Officer does not automatically attract penalty under section 271(1)(c). The Tribunal emphasized that the legislative intent was not to penalize every unaccepted claim, thereby dismissing the revenue's appeal.In alignment with the judicial pronouncements and legal principles, the Tribunal set aside the CIT(A)'s order and allowed the appeal filed by the assessee, ultimately dismissing the revenue's appeal. Consequently, the appeal of the assessee was allowed, and the order was pronounced in the open court on 11/01/2018.