Penalty u/s 271(1)(c) would not attract When Assessee makes an Ineligible Claim: ITAT [Read Order]

The ITAT bench comprising of Accountant Member T. S. Kapoor and Judicial Member Partha Sarathi Chaudhury, held that penalty under Section 271(1)(c) of the Income Tax Act, 1961 would not attract when assessee makes an Ineligible Claim.

In instant case assessee filed an appeal against the order of CIT (A) and the only grievance raised  by the assessee is the action of learned CIT(A) by which he has confirmed the penalty imposed by the Assessing Officer u/s 271(1)(c) of the Act.

The counsel for revenue submitted that the aforesaid action of AO is on the ground that no business income was earned during the year under assessment and relied on the order of authorities below.

The tribunal bench while observing the balance sheet and profit & loss account found that assessee had filed complete particulars with respect to assets on which depreciation was claimed.

Since the assessee had fully disclosed the fixed asset and claimed a depreciation to the extent of Rs.2,57,677/- and therefore, it cannot be said that the assessee had concealed income or had furnished wrong particulars of income, the bench said.

Finally the tribunal observed” Even if it is presumed that assessee was not eligible for allowance of depreciation even then the penalty u/s 271(1)(c) cannot be imposed as held by  Supreme Court in the case of CIT vs. Reliance Petroproducts (P.) Ltd. (supra) wherein the Court held that every wrong claim made by the assessee cannot tantamount to furnishing of wrong particulars of income or concealment of income.