2026 (5) TMI 106

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....Year 2014-15. 2. The Assessee has taken the following ground of appeal:- 1. Ld. CIT (A) (NFAC) erred in law and on facts in confirming penalty levied by AO of Rs. 12,95,910/- invoking provisions of s. 271(1)(c) of the Act ignoring the fact that appellant has neither concealed income nor furnished inaccurate particulars of income. 2. Ld. CIT (A) (NFAC) erred in law and on facts in confirming penalty levied on disallowance of Rs. 39,27,000/- document and stamp charges in relation to increase in authorized share capital treating as capital expense 3. Ld. CIT (A) (NFAC) erred in law and on facts in not appreciating that when books of accounts are audited and claim is duly disclosed supported by judicial precedents ....

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....records. 5. At the outset, both the parties fairly submitted that the issue raised by the assessee in the present appeal stands covered by the decision of Hon'ble Supreme Court in the case of CIT Vs. Reliance Petro Products Ltd. Reported in 322 ITR 158 we hold that there cannot be a penalty where there was bond fide error in the claim. The relevant finding in the judgment of Hon'ble Supreme Court reads as under: A glance of provision of section 271(1)(c) would suggest that in order to be covered, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The instant case was not the case of concealment of the income. That was not ....

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....plied by the assessee in its return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under section 271(1)(c). A mere making of the claim, which is not sustainable in law by itself will not amount to furnishing of inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to the inaccurate particulars. [Para 9] The revenue contended that since the assessee had claimed excessive deductions knowing that they were incorrect, it amounted to concealment of income. It was argued that the falsehood in accounts can take either of the two forms: (i) an item of receipt may be suppressed fraudulently; (ii) an item of expen....