“Section 271(2)”
The decision most relied on for Section 271(2) is Godrej & Boyce Mfg. Co. Ltd. v. DCIT (328 ITR 81), cited in 1,183 judgments on BharatTax.
Leading authorities on Section 271(2)
Rule 8D, for computing disallowance under Section 14A for expenses related to exempt income, applies from Assessment Year 2008-09 onwards; for prior years, a reasonable disallowance must be made. The disallowance under Section 14A cannot exceed the actual exempt income earned.
A notice issued under Section 274 read with Section 271(1)(c) is invalid if it fails to specify whether penalty proceedings are for concealment of particulars of income or furnishing inaccurate particulars of income. Such lack of specificity vitiates the penalty proceedings.
A penalty notice issued under section 274 read with section 271(1)(c) is invalid if it fails to specify the exact charge by not striking off the irrelevant limb (concealment of income or furnishing inaccurate particulars of income). Such an omnibus or vague notice renders the penalty proceedings bad in law, and any penalty imposed on its basis is liable to be quashed.
An order imposing penalty for failure to carry out a statutory obligation results from quasi-criminal proceedings. Penalty is not ordinarily imposed unless the party acted deliberately in defiance of law, was guilty of contumacious or dishonest conduct, or acted in conscious disregard of their obligation.
Penalty under section 271(1)(c) is not leviable for legally unsustainable claims if the assessee provides a substantiated, bona fide explanation without concealing facts or giving incorrect information. However, penalty is attracted if a claim is baseless, legally incorrect, and the explanation lacks bona fides.
A penalty levied under Section 271(1)(c) for concealment of income or furnishing inaccurate particulars cannot be deleted merely due to technical defects in the penalty notice, such as not ticking the specific default, if the assessee understood the charges.
A clarificatory or declaratory amendment to a statutory provision has retrospective effect from the date the original provision came into force, as its purpose is to clarify existing law rather than introduce new law.
Subsidies and excise duty refunds that are accounted for in the Profit and Loss account are revenue in nature, form part of business income, and are eligible for deductions under Section 80IB/80IC. Such receipts cannot be reduced from the block of assets for depreciation calculation.
