Penalty under Section 271(1)(c) deleted where 80-IA and 80-IB claims were bona fide, Revenue appeal dismissed

The HC upheld the ITAT and CIT(A) in deleting penalty imposed under Section 271(1)(c) on the assessee. The Revenue had challenged the allowance of deductions under Sections 80-IA and 80-IB, alleging concealment and furnishing of inaccurate particulars. Relying on the SC ruling that mere rejection or non-acceptance of a claim does not automatically attract penalty, the HC held that the assessee's claim was bona fide and based on disclosed facts. Finding no perversity or substantial question of law, the HC dismissed the Revenue's appeal.

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Issues: Whether the Tribunal was correct in law and on facts in deleting the penalty of Rs. 20,22,944 imposed under Section 271(1)(c) of the Income-tax Act, 1961, on the ground that the claim for deductions under Sections 80-IA and 80-IB and allocation of expenses between head office and units was a debatable issue and the particulars in the return were not inaccurate or concealed.

Analysis: The appeal concerns deletion of penalty under Section 271(1)(c) where the Assessing Officer disallowed deductions under Sections 80-IA and 80-IB and imposed penalty for allegedly furnishing inaccurate particulars. The Tribunal and CIT(A) examined the assessee's explanations, the nature of claims for allocation of expenses between head office and units, and authority precedent holding that allocation and computation of such deductions are debatable questions of fact and law. The court applied Supreme Court principles that (a) particulars refer to details in the return and inaccuracy requires that supplied particulars be incorrect or erroneous, (b) mere assertion of a claim unsustainable in law does not automatically amount to furnishing inaccurate particulars, and (c) where the assessee has furnished full details and a bona fide explanation exists, penalty under Section 271(1)(c) is not attracted. The Tribunal's reliance on the debatable-issue approach and on the assessee's disclosure and explanation was held to be consistent with the governing jurisprudence and facts of the case.

Conclusion: The Tribunal was legally correct in deleting the penalty under Section 271(1)(c); the findings support that the particulars furnished were not shown to be inaccurate or concealment of income, and the appeal of the revenue is dismissed.

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