The Ahmedabad Income Tax Appellate Tribunal (ITAT) has recently held that mere rejection of a claim would not invite levy of penalty under section 271(1)(C) of Income Tax Act, 1961.
Section 271(1)(c) of the Income Tax Act, 1961 states that when the assessing officer while the assessment proceeding found the assessee concealed his income or make inaccurate particulars of his income he shall make an amount of penalty.
While assessment proceedings has been conducting assessing officer found that assessee Balkrishna Purshottamdas Patel concealed and furnishing inaccurate particulars of income amounting to Rs.22,85,528/-and Which was relating to the investment in property.Thereafter the assessing officer levied penalty under section 271(1)(C) of Income Tax Act 1961.Against the order of imposing penalty assessee filed an appeal before ITAT.
Chirag Shah counsel for the assessee contended that “assessee had duly explained source of investment and the same was not found to be false/untrue, and therefore, there was no case for levy of penalty.
Atul Pandey counsel for the revenue submits that, after verifying additional evidence and remand report the assessee could not explain the source of investment in the property of Rs.22,85,528/-Thus the assessee could not be explained the same. Hence the assessee has furnished inaccurate particulars to this extent and the penalty levied by the assessing officer on this amount was confirmed.
After considering the contentions of the both parties the division bench of the Annapurna Gupta,, (Accountant Member) and Madhumita Roy, (Judicial Member) allowed the appeal filed by the assessee and observed that,
“Particulars relating to the source of investment of Rs.22,85,528/- made in immovable property was furnished by the assessee ,as invested by Rashmikant C. Patel. The same has not been found to be false or untrue by the Revenue therefore source of investment was furnished by the assessee which was not found to be inaccurate or even incorrect by the Revenue.
Further the bench determined that mere rejection of a claim of the assessee will not invite levy of penalty under section 271(1)(c) of the Income Tax Act, 1961.
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