2018 (4) TMI 266 - HC - Income Tax

Appeal dismissed for lack of legal question, Tribunal's findings upheld. Penalty deletion justified, disallowance due to interpretation.

The High Court dismissed the appeal as it found no substantial question of law. It upheld the Tribunal's findings that there was no concealment of income ... Penalty u/s 271(1)(c) - deduction u/s 80IB disallowed - Held that:- In view of the explanation added, it cannot be said that the onus lies on the Revenue to establish mens rea in cases of concealment and/or short payment of tax. There is an onus on the Assessee. Whether the Assessee has been able to discharge the onus would depend on the facts and circumstances of the case. In the instant case, the learned Tribunal, in effect, arrived at a clear finding that imposition of penalty was not justified having regard to the facts and circumstances of the case. No substantial question of law that warrants interference. Issues Involved1. Deletion of penalty under Section 271(1)(c) of the Income Tax Act, 1961.2. Interpretation of Section 80IB of the Income Tax Act, 1961.3. Whether there was concealment of income or furnishing of inaccurate particulars of income.4. Applicability of Section 260A of the Income Tax Act, 1961.5. Determination of substantial question of law.Detailed Analysis1. Deletion of Penalty under Section 271(1)(c) of the Income Tax Act, 1961The core issue revolves around the deletion of the penalty imposed under Section 271(1)(c). The Income Tax Appellate Tribunal (ITAT) confirmed the deletion of the penalty, which was initially imposed by the Assessing Officer amounting to Rs. 1,50,03,613/-. The penalty was levied on the grounds of alleged concealment of income and furnishing inaccurate particulars. However, the Appellate Commissioner and the ITAT both found that the disallowance of the claim under Section 80IB was due to interpretation of the law and not due to any concealment or inaccurate particulars. The Tribunal concluded that the respondent had a reasonable basis for their claim, and thus, the penalty was not justified.2. Interpretation of Section 80IB of the Income Tax Act, 1961The respondent claimed a deduction under Section 80IB, which was disallowed by the Assessing Officer on the grounds that the units in Puducherry had incurred losses. The Appellate Commissioner and the ITAT upheld the disallowance but noted that the disallowance was due to an interpretation of the provisions of Section 80IB. The Tribunal found that the respondent had furnished all necessary details and that the claim was disallowed purely on interpretative grounds, not due to any concealment.3. Concealment of Income or Furnishing Inaccurate ParticularsThe Tribunal and the Appellate Commissioner both found that there was no concealment of income or furnishing of inaccurate particulars by the respondent. The Tribunal noted that the disallowance was a result of the interpretation of the law and not due to any fraudulent or negligent behavior by the respondent. The Tribunal's factual finding was that the respondent had disclosed all relevant details and the claim was disallowed on interpretative grounds.4. Applicability of Section 260A of the Income Tax Act, 1961Section 260A allows an appeal to the High Court only if there is a substantial question of law involved. The High Court examined whether the case involved any substantial question of law. It was concluded that the case did not involve any substantial question of law as the Tribunal's decision was based on factual findings and interpretation of the law, which did not warrant interference under Section 260A.5. Determination of Substantial Question of LawThe High Court referred to various Supreme Court judgments to determine what constitutes a substantial question of law. It was emphasized that a substantial question of law must be debatable, not previously settled by law, and must have a material bearing on the decision of the case. The High Court found that the Tribunal's findings were based on facts and there was no debatable legal issue involved. Therefore, no substantial question of law was identified that would justify the appeal under Section 260A.ConclusionThe High Court dismissed the appeal, concluding that there was no substantial question of law involved. The Tribunal's findings that there was no concealment of income and that the disallowance was due to an interpretation of the law were upheld. The deletion of the penalty under Section 271(1)(c) was confirmed, and the appeal was not entertained.