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Income Tax Appellate Tribunal, Conducted through E-Court, Rajkot
Before: Ms. SUCHITRA KAMBLE & SHRI WASEEM AHMED,
PER WASEEM AHMED, ACCOUNTANT MEMBER:
The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax(Appeals)-2, Rajkot, dated 03/04/2019 arising in the matter of penalty order passed under s.271(1)(c) of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2015-16.
The solitary issue raised by the assessee is that the learned CIT (A) erred in confirming the penalty levied by the AO for Rs. 40,451.00 under the provisions of section 271(1)(c) of the Act.
The assessee in the present case is a partnership firm and engaged in the business of processing, freezing and export of frozen fish/ sea foods. The assessee in the year under consideration has claimed deduction for Rs. 1,30,910.00, representing the employees contribution, which was disallowed by virtue of the provisions of section 36(1)(va) of the Act on the reasoning that the payment was not made within the time specified under the relevant Act in the assessment framed under section 143(3) of the Act vide order dated 20-09-2017. As per the AO, the assessee has furnished inaccurate particulars of income by claiming the deduction of the impugned expenditure. Thus the AO initiated the penalty proceedings under section 271(1)(c) read with section 274 of the Act by issuing notice dated 20-09- 2017. The AO finally levied the penalty of ₹ 40,451/- being 100% of the amount of tax sought to be evaded by the assessee under the provisions of section 271(1)(c) of the Act on account of inaccurate particulars of income furnished by the assessee.
3.1 Aggrieved assessee preferred an appeal to the learned CIT (A) who confirmed the order of the AO.
Aggrieved by the order of the learned CIT (A), the assessee is in appeal before us.
4.1 The ld. AR before us submitted that the claim of the assessee cannot be treated as furnishing inaccurate particulars of income. At the most, the claim made by the assessee can be a wrong claim which is not equivalent to furnishing inaccurate particulars of income.
On the other hand, the learned DR before us vehemently supported the order of the authorities below.
We have heard the learned DR and perused the materials available on record. The issue in the present case revolves whether the assessee has furnished inaccurate particulars of income by claiming the deduction of employees PF contribution which was deposited beyond the stipulated time. The word ‘inaccurate particulars’ has not been defined under the provisions of the Act. Thus we refer the dictionary meaning of inaccurate which denotes ‘not accurate’, something incorrect or wrong, not exact, in error. Admittedly, the claim of the assessee for the deduction under section 80P(2)(a)(i) of the Act with respect to employees PF contribution was not acknowledged by the Revenue in the quantum proceedings. Thus, it can be concluded that the claim of the assessee was inaccurate. Accordingly, it appears that the penalty provisions under section 271(1)(c) have to be invoked. However, if we apply this logic, then any addition made by the AO in the assessment would lead either to concealment of the particulars of income or furnishing inaccurate particulars of income. In other words the assessee furnishes the particulars of income in his income tax return which is subsequently verified by the revenue. If in the process of verification of the income of the assessee, the AO calculates different total income than the income declared by the assessee, the difference between incomes declared by assesses and assessed by the AO would amount to furnishing of inaccurate particulars of income or concealment of income. However, we note that the Hon’ble Supreme Court in the case of Dilip N Shroff vs. JCIT reported in 161 taxman 218 has discussed the term inaccurate by observing that the word inaccurate signifies a deliberate act or omission on the part of the assessee. Thus, to arrive at the conclusion that, the assessee has furnished inaccurate particulars of income, it has to be tested whether it has been done so with the dishonest intent which cannot be regarded as an innocent act. In other words the element of consciousness in furnishing inaccurate particulars of income coupled with circumstantial evidences should be present in the particular case. Unless, the characters of inaccurate particulars of income as discussed above are present in any particular case, the penalty provisions under section 271(1)(c) of the Act cannot be attracted.
6.1 Coming to the present case, we find that the expenses under the head of employees PF contribution was duly incorporated in the financial statements. But the same was not allowed as deduction by the AO which was subsequently confirmed by the learned CIT (A). Thus, to our considered view, the claim of the assessee at the most can be regarded as inaccurate claim which cannot be equated with the furnishing inaccurate particulars of income. It is for the reason that nothing has been brought on record by the authorities below suggesting that the assessee has furnished the particulars of income with dishonest intent. In view of the above and after considering the facts in totality, we set aside the finding of the learned CIT (A) and direct the AO to delete the penalty levied by him under section 271(1)(c) of the Act. Hence the ground of appeal of the assessee is allowed
In the result, the appeal of the assessee is allowed.
Order pronounced in the Court on 14/09/2022 at Ahmedabad.