ITAT Deletes Penalty u/s 271(1)(c) of Income Tax Act, Citing No Inaccurate Income Particulars or Deliberate Concealment [Read Order]

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) deleted the penalty under Section 271(1) (c) of the Income Tax Act, 1961 concluding there was no furnishing of inaccurate particulars of income or deliberate attempt to conceal the income.

Facts giving rise to the present appeal are that the assessee- revenue Deputy Commissioner of Income Tax  had e-filed its return of income on 30.11.2016, declaring total income of Rs. 14,22,64,180/-. The case was selected for scrutiny assessment and the assessment under Section 143(3) of the Income Tax Act was framed on 22.12.2018 at Rs. 16,14,72,606/- by making disallowance of Rs. 15,21,372/- by invoking the provision of section 40(a)(i) of the Act; disallowance under Section 35(2)(AB) of the Act at Rs. 1,76,87,054/- and relief claimed under Section  90 of the Act of Rs. 24,37,344/- was restricted to NIL.

Thereafter, the Assessing Officer (AO) initiated penalty proceedings under Section 271(1)(c) of the Act and vide order dated 28.06.2019, imposed penalty in respect of disallowance of Rs. 1,76,87,054/- for furnishing inaccurate particulars of income. Thus, the AO imposed a penalty of Rs. 60, 11,830/-.

This was a revenue appeal filed against the order passed by the CIT(A) dated 21.11.2019, whereby CIT(A) deleted the penalty of Rs. 60,11,830/- imposed by A.O. under section 271(1)(c) of the Income Tax Act, 1961. And the penalty was levied on the disallowance of deduction claimed by the assessee under section 35(2AB) of the Income Tax Act.

Subsequently, AO vide order 22.12.2018 under Section 143(3) of Income Tax Act allowed the total research and development expenditure of Rs. 4.41 crores. However, in view of DSIR approval, he restricted the additional deduction under Section 35(2AB) in respect of the expenditure to Rs. 2,64,52,000/-.

The bench found that where there was no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there was no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which was not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars.

The two member bench of the tribunal comprising M. Balaganesh (Accountant member) and Kul Bharat (Judicial member) noted that the appellant had given an explanation, there was no furnishing of inaccurate particulars of income or deliberate attempt to conceal income. The rigors of the provisions of section 271(1)(c) are clearly not attracted in this case. In view thereof, the penalty levied under Section 271(1)(c) of the Income Tax Act of Rs.60,11,830/- was deleted. The grounds of appeal are ruled in favour of the appellant. Accordingly, the appeal of the revenue was dismissed.

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