Bona Fide Lease Rental Claim based on AS-19 No Ground for Penalty: ITAT Quashes ₹30 Cr Levy on Axis Bank [Read Order]
ITAT quashed the penalty imposed on Axis Bank for the Lease rental claim under AS-19 as it concluded that Axis Bank had acted in a Bona Fide manner.
The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, quashed the penalty imposed on Axis Bank under section 271(1)(c) of the Income Tax Act, 1961, for furnishing inaccurate particulars of income, after noting that rental-deduction was based on Accounting Standard-19.
Axis bank, the appellant, had declared total income as ₹58,30,66,59,722 for the accounting year 2011-12, and claimed ₹93,04,000 deduction on revision of lease operating expenses.
The respondent, Assistant Commissioner of Income Tax, upon completion of assessment under section 143(3), declared total income as ₹61,14,55,65,633 and disallowed the claim of ₹93.04 crore and imposed penalty amounting to ₹30,90,55,620 on the appellant for furnishing the wrong particulars of income.
Tushar Hemani, the counsel for the appellant, explained that during A.Y. 2011-12, Accounting policy was changed by the appellant and adopted Accounting Standard 19 (AS 19) as Accounting policy.
As per AS-19 accounting standards, it was mandated that the lease rent should be claimed on Straight Line Method (SLM). The appellant claimed lease expense on SLM basis, which resulted in claiming additional sum of ₹93.04 crore during the year.
The appellant counsel has also contended that the absence of clear specification in the Assessment order regarding whether the order is imposed for “concealment of income” or “furnishing inaccurate particulars of income” cannot be sustained.
The respondent counsel, Sher Singh, contended that the AO had initiated the penalty proceeding under section 271(1)(c) of the Incometax act, 1961 for furnishing inaccurate particulars of income and the penalty was also imposed for the same.
The respondent counsel have also submitted that the AS-19 was not notified by the Central Government for tax purposes. The Axis bank has the right to compute income in accordance with AS-19 under the provisions of Companies Act. However, for computation of income tax, AS-19 should not be used as it was not notified by the central government.
Suchitra Raghunath Kamble, judicial member and Narendra Prasad Sinha, accountant member, noted that the claim made by the assessee cannot be held to be inaccurate particulars of the income.
From various precedents, the tribunal observed that rejection of claim by the revenue itself cannot attract the penalty under section 271(1)(c) of the act. The appellant has furnished a plausible explanation for the claim made by them and the said explanation is not false. Therefore, the appellant had not disclosed any inaccurate figure or not acted in a bona fide manner.
Accordingly, the tribunal quashed the penalty order passed under section 271(1)(c) of the Income Tax Act for furnishing inaccurate particulars of income.
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