DCIT 15(3)(6), MUMBAI vs. SYSTEMATIC INDUSTRIES P.LTD, MUMBAI

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ITA 1314/MUM/2017Status: DisposedITAT Mumbai11 July 2018AY 2010-114 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that making an incorrect claim, by itself, does not amount to furnishing inaccurate particulars of income. Therefore, penalty under Section 271(1)(c) is not leviable in such cases.

What were the facts?

The Assessing Officer excluded interest income from eligible profits for Section 80IB deduction and imposed penalty. The assessee claimed this interest income as eligible for the deduction.

What were the issues?

Whether penalty under Section 271(1)(c) can be levied solely for making an incorrect claim that was not accepted by the revenue?

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 80IB

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, MUMBAI BENCH “J” MUMBAI

Before: SHRI JOGINDER SINGH & SHRI N.K. PRADHAN

For Appellant: Mr. D.C. Jain, AR
For Respondent: Ms. Aarju Garodia, DR, Mr. D.C. Jain, AR
Hearing: 03/07/2018Pronounced: 11/07/2018

ORDER

PER N.K. PRADHAN, AM

1.

This is an appeal filed by the Revenue. The relevant assessment year is 2010-11. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-24 [in short ‘CIT(A)’], Mumbai and arises out of the penalty imposed u/s 271(1)(c) of the Income Tax Act 1961, (the ‘Act’).

2.

The ground of appeal

reads as under: On the facts and in the circumstances of the case in a law, the Ld. CIT(A) has erred in deleting u/s 271(1)(c) of the I.T. Act when the M/s Systematic Industries ITAT in favour of the revenue which itself proves that a claim made by the assessee is not only incorrect in law, but is also unsubstantiated and the explanation furnished by the assessee for making such a claim is not satisfactory leading to inaccurate particulars of income by the assessee and hence attracting penalty u/s 271(1)(c) of the Act.

3. Briefly stated, the facts of the case are that the assessee filed its return of income on 12.10.2010 declaring income of Rs.2,15,21,249/-. The Assessing Officer (AO) completed the assessment u/s 143(3) on 25.01.2013 determining total income at Rs.2,65,13,986/-. While arriving at the above assessed income, the AO excluded interest income of Rs.38,40,567/- from the eligible profits and gains for the purpose of computing deduction u/s 80IB of the Act. The AO treated the interest income as income from other sources. Subsequently, the AO imposed penalty of Rs.13,05,408/- u/s 271(1)(c) on income of Rs.38,40,567/- holding that the assessee had deliberately made wrong claim u/s 80IB by including the interest income in the eligible profits.

4. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A), following the decision in Reliance Petroproducts (P.) Ltd.322 ITR 158 (SC) held that making an incorrect claim cannot tantamount to furnishing of inaccurate particulars of income and therefore, directed the AO to delete the penalty of Rs.13,05,408/-.

M/s Systematic Industries

5.

Before us, the Ld. DR relies on the order of the AO, whereas the Ld. counsel of the assessee relies on the decision in Reliance Petroproducts (P.) Ltd. (supra) and supports the order passed by the Ld. CIT(A).

6.

We have heard the rival submissions and perused the relevant materials on record. The sole dispute is whether penalty u/s 271(1)(c) is leviable in a case where the interest income is excluded by the AO from the eligible profits and gains for the purpose of computing deduction u/s 80IB of the Act? In the case of Reliance Petroproducts (P.) Ltd. (supra), the Hon’ble Supreme Court has held that merely because the assessee had claimed expenditure, which claim was not accepted or was not acceptable to the revenue, that by itself would not attract penalty u/s 271(1)(c). We are of the considered view that the ratio laid down in the above decision squarely applies to the present case. Following the same, we uphold the order of the Ld. CIT(A). 7. In the result, the appeal is dismissed. Order pronounced in the open Court on 11/07/2018. Sd/- Sd/- ( JOGINDER SINGH) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 11/07/2018 Rahul Sharma, Sr. P.S.

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