PSU power company wins penalty deletion under section 271(1)(c) for inaccurate particulars without malafide intention

ITAT Delhi ruled in favor of a PSU power generation company, deleting penalty u/s 271(1)(c) for furnishing inaccurate particulars. The Tribunal found no malafide intention as the company was a government statutory organization, not a private entity. The income difference arose from adjustments to provisions for ex-gratia leave salary, gratuity, and doubtful debts under section 115JB. Since the Tribunal had already deleted the ex-gratia provision disallowance in quantum appeal, penalty was unwarranted. Additionally, the doubtful debts disallowance was based on retrospective amendment by Finance Act 2009, which didn't exist when the original return was filed in 2005-06. No penalty can be levied for additions based on retrospective law changes.

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Issues involved: Appeal against penalty under section 271(1)(c) for furnishing inaccurate particulars of income for AY 2005-06.

Summary:

Issue 1: Penalty under section 271(1)(c) for furnishing inaccurate particulars of income:
The assessee, a Govt. enterprise engaged in power generation, filed return for AY 2005-06 declaring income of Rs. 16,43,97,948/-. Penalty proceedings were initiated for inaccuracies under section 115JB of the Act. Assessee contended no attempt to file inaccurate particulars, citing lack of provision for certain adjustments at the time of filing. AO imposed penalty upheld by CIT(A).

Issue 2: Justification for penalty imposition:
Assessee's argument that adjustments made were suo-moto in revised return and retrospective amendments in law were not in place during filing was presented. Assessee's status as a Public Sector Undertaking was highlighted to show lack of malafide intention. Various ITAT decisions were cited to support the case.

Issue 3: Tribunal's analysis and decision:
Tribunal noted the absence of malafide intention due to the nature of the assessee being a Govt. entity. The income declared by the assessee was accepted by the AO under normal provisions. Discrepancies in income under section 115JB were due to certain adjustments, including provisions for ex-gratia leave salary and doubtful debts. Tribunal found penalty imposition unwarranted and unsustainable, vacating the orders of AO and CIT(A) and allowing the assessee's appeal.

Separate Judgment:
No separate judgment was delivered by the judges in this case.

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