Mere Making of a Wrong Claim would not attract Income Tax Penalty: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Chennai recently held that mere making of claim would not be attracted Income Tax Penalty.

Assesee P.S. Jayaraman claimed exception under section u/s. 54F and 54EC of the Income Tax Act, 1961under the heads of capital gains. The assessement was completed on 27-03-2014 under section 143(3) of Income Tax Act. Assesee claimed the exemption u/s. 54EC was for Rs.100Lacs. But Assesing Officer found that the land sold was one and therefore, the exemption would be allowable only to the extent of Rs.50 Lacs.

Thereafter the order was subjected to appeal before the CIT (A).The deduction claimed u/s 54EC was confirmed and deduction claimed u/s 54F was partly allowed along with imposing fine of Rupees Thirty Nine Lakh  for concealment income and furnishing of inaccurate particulars of income. Against the order of CIT (A) assesse filed an appeal before the ITAT.

The observation of Meenakshi Sundaram, for assessee was that, mere making of claim under section 54EC of Income Tax, Act which was partly accepted do not call for levy of penalty. “Deduction u/s 54F was solely due to difference in interpretations of the provisions and therefore, the penalty was not to be levied on this count”.

ARV Sreenivasan, for Revenue contented that the claim was not made in accordance with law and found that assesee make additions in the  Pension amount and interest on bank account.

The Division Bench Mahavir Singh, Vice President and Manoj Kumar Aggarwal, Accountant Member allowed the appeal filed by the assessee, held that “Mere making of wrong claim do not amount to furnishing of inaccurate particulars of income. In the absence of finding that any details supplied by the assessee is incorrect or false, penalty could not be levied”

To Read the full text of the Order CLICK HERE

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