Incorrect Claim of Deduction or Expenses Made in ITR does not Amount to Concealment of Income or Furnishing Inaccurate Particulars: ITAT sets aside NFAC Order [Read Order]

The Pune Bench of Income Tax Appellate Tribunal (ITAT) held that rejection of incorrect claim of deduction or expense made in the ITR, do not ispo facto tantamount to concealment of income or furnishing of inaccurate particulars, and set-aside the impugned order of NFAC(National Faceless Appellate Centre).

The assessee in this present case is Kongnoli Sarva Seva Society Ltd. The return of income (ITR) filed by the appellant society was subjected to regular assessment under Section 143(3) of the Income Tax Act,1961 whereby certain additions were carried on account of disallowance under Section 80P of the Income Tax Act and brought to tax the consequential income under the head ‘House Property’ and ‘Other Sources’, by the Assessing Officer (AO).

The AO initiated penalty proceedings for concealment under Section 271(1)(c) of the Income Tax Act and considering the submission, has imposed penalty of 1,07,739.

Aggrieved by the said levy, the assessee filed two appeals before the first appellate authority  i.e. Commissioner of Income TaxAppeals [CIT(A)] and another appeal against the levy of penalty was also filed before NFAC.

The CIT(A) after careful perusal of the records, submission and averment and arguments put forth by the counsel for the assessee during the course of physical hearing, and relying on Supreme Court decision in ‘Reliance Petro Products Pvt. Ltd’ allowed the appeal of the assessee society and deleted the penalty levied under Section 271(1)(c) of the Income Tax Act.

But on the basis of same submission placed on record, the NFAC confirmed the action of Ld. AO imposing the penalty, thus dismissed the appeal of the appellant society.

In the light of facts and circumstances of the case the two Judge Bench comprising of Partha Sarathi Chaudhury, Judicial Member and G. D. Padmahshali, Accountant Member, set-aside the impugned order of NFAC observing that rejection of incorrect claim of deduction or expense made in the ITR, do not ispofacto tantamount to concealment of income or furnishing of inaccurate particulars.

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