Penalty under income tax for inaccurate particulars contested due to allocation method; penalty denied after particulars found complete

Dispute concerns imposition of a penalty for alleged furnishing of inaccurate particulars arising from allocation of expenses between eligible and non-eligible units claiming tax incentive deductions. The assessee consistently adopted a particular allocation method while the assessing officer used a different approach; however, the assessee disclosed all particulars of income and expenditure. Because there was no failure to furnish accurate particulars, the penalty for providing inaccurate particulars was not appropriate, and the imposition of penalty was set aside with decision against the revenue.

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Issues: Whether penalty under Section 271(1)(c) of the Income-tax Act, 1961 can be imposed for the assessment year 2005-06 where the Assessing Officer reallocated expenses between eligible and non-eligible units though the assessee furnished particulars of expenditure and the genuineness of expenditures was not disputed.

Analysis: The issue turns on whether the conditions for levy of penalty under Section 271(1)(c) are satisfied. The Assessing Officer reallocated expenses claimed under Sections 80IB/80IC, resulting in variation in income and initiation of penalty proceedings. There is no finding in the assessment order that the particulars of income or expenditure furnished by the assessee were inaccurate, untrue, or false. The reallocation was based on the same particulars produced by the assessee; the dispute was limited to the method of allocation and the quantum of deduction. A mere difference of opinion on allocation or quantum, where particulars are fully disclosed and the genuineness of expenditure is not disputed, does not satisfy the statutory requirement of furnishing inaccurate particulars or concealing income required for penalty under Section 271(1)(c).

Conclusion: The penalty under Section 271(1)(c) cannot be sustained and the deletion of penalty by the first appellate authority is upheld; decision is in favour of the assessee.

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