The Bombay High Court held that the reduction of tax liability by claiming wrong deduction cannot amount to concealment of income or furnishing inaccurate particulars.
The Respondent, Sonu Realtors Private Limited is a company engaged in the business of construction. For the Assessment Year 2008-2009, respondent filed its return of income at Rs.51,34,740/- after claiming deduction under Sub-Section 10 of 80 IB (Deduction in respect of profits and gains from certain industrial undertakings other than infrastructure development undertakings) of the Income Tax Act, 1961 amounting to Rs.13,72,33,540/-. Subsequently, Commissioner of Income Tax (CIT) passed an order under Section 263 of the said Act holding that respondent company was taxable under the provisions of Section 115JB (Special provision for payment of tax by certain companies) of the said Act. Respondent had agreed for the revision of the assessment pursuant to revision order under Section 263 following which the Assessing Officer passed order under Section 143 (Assessment) of the said Act assessing the income of respondent under Section 115JB. Respondent also paid tax under Section 115JB.
The Assessing Officer, however, later levied penalty under Section 271 (1) (c) Act on the ground that respondent had made an attempt to reduce its tax liability by claiming wrong deduction; and respondent committed a default of not computing the book profit under Section 115JB as required mandatorily by the provisions of Act.
The appellant, Pr. Commissioner of Income Tax has assailed imposition of penalty by the Assessing Officer on the ground that respondent committed a default of not computing the book profit under Section 115JB.
The division bench of Justice Amit B. Borkar and Justice K.R.Shriram said that in any event, even assuming for a moment that such particulars were not furnished but only the return of income was filed showing the income tax payable on the total income as computed under the said Act, that cannot amount to concealment of particulars of income or furnish inaccurate particulars of income. Even the attempt, if any as alleged, to reduce tax liability by claiming wrong deduction cannot amount to concealing the particulars of income or furnishing inaccurate particulars of such income.
“In our view, the Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that question as pressed raises any substantial question of law,” the court ruled.
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