Penalty under Section 271(1)(c) deleted as assessee disclosed all material particulars despite reduced deduction claim

ITAT Delhi dismissed Revenue's appeal in penalty proceedings u/s 271(1)(c). Assessee initially claimed deduction u/s 35(2)(AB) but reduced claim after Competent Authority approved lower expenditure during assessment. CIT(A) deleted penalty following Price Water House Coopers SC precedent. ITAT held expenditure was genuine, accounts audited, Form 3CLA filed, and assessee disclosed all material particulars. Mere reduction by DSIR insufficient for penalty without adverse material from AO. Decision affirmed citing Napord Life Sciences precedent.

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Issues Involved:
1. Deletion of penalty levied u/s 271(1)(c) of the I.T. Act.
2. Allegation of furnishing inaccurate particulars of income by the assessee.

Summary:

Issue 1: Deletion of Penalty Levied u/s 271(1)(c) of the I.T. Act

The Revenue challenged the deletion of the penalty of Rs. 60,11,830 levied u/s 271(1)(c) of the I.T. Act by the Ld.CIT(A). The penalty was imposed by the AO on the grounds that the assessee furnished inaccurate particulars of income by claiming a deduction u/s 35(2)(AB) of the Act, which was subsequently restricted by the Department of Scientific and Industrial Research (DSIR). The Ld.CIT(A) deleted the penalty, noting that the assessee had made a bona fide claim based on the available information and had not concealed any particulars of income.

Issue 2: Allegation of Furnishing Inaccurate Particulars of Income

The Revenue contended that the assessee's claim for deduction u/s 35(2)(AB) was inaccurate and deliberate. However, the assessee argued that the expenditure of Rs. 4.41 crores on R&D was genuine and the DSIR's restriction to Rs. 2.85 crores was not available at the time of filing the return. The Ld.CIT(A) observed that the genuineness of the expenditure was not questioned and the assessee had disclosed all material particulars. The Tribunal upheld the Ld.CIT(A)'s decision, citing the Supreme Court's rulings in Price Water House Coopers Pvt. Ltd. vs. CIT and CIT vs. Reliance Petroproducts (P) Ltd., which state that a mere incorrect claim does not amount to furnishing inaccurate particulars.

Conclusion:

The Tribunal affirmed the Ld.CIT(A)'s order, concluding that the penalty u/s 271(1)(c) was not justified as the assessee had not furnished inaccurate particulars or concealed income. The appeal by the Revenue was dismissed.

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