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Income Tax Appellate Tribunal, DELHI BENCH ‘A’ : NEW DELHI
Before: SHRI G.D. AGRAWAL & SHRI KULDIP SINGH
PER KULDIP SINGH, JUDICIAL MEMBER : The appellant, Deputy Commissioner of Income-tax, Sonepat Circle, Sonepat (hereinafter referred to as ‘the Revenue’) by filing the present appeal sought to set aside the impugned order dated 10.03.2014, passed by the Commissioner of Income-tax (Appeals), Rohtak qua the assessment year 2009- 10 deleting the penalty levied u/s 271(1)(c) of the Income-tax Act, 1961 (for short ‘the Act’) on the grounds inter alia that :-
“1. On the facts and in the circumstances of the case the Ld. CIT (A) has erred in law and in facts in deleting the penalty of Rs.20,97,666/- which was imposed by the AO u/s 271(1)(c) of the Act as the assessee had furnished inaccurate particulars in its return of income and was therefore liable for penalty as per provisions of IT Act. The Ld. CIT (A) has deleted the penalty without appreciating the facts that the assessee had made a default under the provision of section 271(1)(c) of the IT Act.
That the appellant craves for permission to add, delete or amend the ground of appeal before or at the time of hearing of appeal.”
2. Briefly stated facts of this case are : on the basis of assessment completed under section 143(3) of the Act at Rs.4,97,16,424/-, penalty proceedings were initiated against the assessee u/s 271(1)(c) of the Act on the ground that addition of Rs.61,71,421/- u/s 14A of the Act was made against the assessee which was confirmed by ld. CIT (A). Assessee challenged the penalty proceedings on the ground that section 271(1)(c) of the Act applies only where the assessee has concealed the particulars of income or furnished inaccurate particulars of such income and in the instant case, no such concealment of income has been made nor any information given in the return of income was found to be incorrect or inaccurate. Finding the submissions made by the assessee not satisfactory, AO came to the conclusion that assessee has invested in interest bearing funds in mutual funds and shares and the income of the same was exempt as per Income-tax Act, which is clear case of furnishing of wrong particulars of income as
per section 271(1)(c) of the Act and thereby imposed the penalty to the tune of Rs.20,97,666/-.
Assessee carried the matter before the ld. CIT (A) by way of filing the appeal who has allowed the appeal. Feeling aggrieved, the Revenue has come up before the Tribunal by way of filing the present appeal.
We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
Ld. DR for the revenue contended that since the quantum in this case has already been confirmed having not been challenged by the assessee, the Revenue is justified in imposing the penalty and relied upon the penalty order.
However, on the other hand, ld. AR for the assessee to repel the arguments addressed by ld. DR contended that disallowance made by the AO u/s 14A of the Act is a legal disallowance and does not amount to furnishing of inaccurate particulars of income nor it is a case of concealment of income and relied upon the decision rendered by Hon’ble Supreme Court in the case of CIT vs. Reliance Petro Products Pvt. Ltd. – 322 ITR 158 (SC).
In the backdrop of the aforesaid facts and circumstances of the case, the sole question arises for determination in this case is:-
“as to whether the assessee has concealed particulars of income or has furnished inaccurate particulars of income during assessment proceedings?” 10. Hon’ble Supreme Court in a case cited as CIT vs. Reliance Petro Products Pvt. Ltd. 322 ITR 158 (SC) while interpreting the provisions contained u/s 271(1)(c) decided the identical issue in favour of the assessee. Operative part of which is reproduced for ready reference as under :-
“A glance at the provisions of section 271(1)(c) of the I.T. Act, 1961 suggests that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The meaning of the word “particulars” used in section 271(1)(c) would embrace the detail of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, because that is the only document where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. To attract penalty, the details supplied in the return must not be accurate, not exact or correct, not according to the truth or erroneous.
Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars.”
Bare perusal of the penalty order and order passed by ld. CIT (A) in quantum proceedings apparently go to prove that AO has made an addition on the basis of the fact that the assessee has invested its interest bearing funds in the mutual funds and shares and income of the same is exempt under the Act which amounts to furnishing of wrong particulars of income. To our mind, when the assessee has claimed deduction of Rs.61,71,421/- u/s 14A of the Act and has not concealed anything and in case the deduction has been disallowed by the AO and assessment order has been confirmed by the CIT (A) it does not amount to concealment of income or furnishing of inaccurate particulars .
In the judgment in case of CIT vs. Reliance Petro Products Pvt. Ltd. (supra), Hon’ble Supreme Court held that, “mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee.” Moreover, the purpose of scrutiny proceedings initiated against the assessee is to examine the sustainability of the claim made by the assessee in its return of income. So, when complete facts and figures regarding income and deductions claimed have been brought before AO by the assessee, the question of concealment or furnishing of inaccurate particulars does not arise.
In view of what has been discussed above, finding no illegality or perversity in the findings returned by the ld. CIT (A), the appeal filed by the revenue is hereby dismissed. Order pronounced in open court on this 24th day of January, 2017.