Income Tax Act, 1961

--Penalty under section 271(1)(c)--Furnishing inaccurate particulars of income Part of deduction claimed under section 80HHC disallowed--Assessee had set off current years losses against the amount of profit after claiming deduction under section 80HHC. Assessing officer was of the view that the deduction under section 80HHC was allowable on the gross total income as defined under section 80AB. The gross total income, according to section 80AB, was the income of the assessee after setting off the current year's losses. Consequently, assessing officer had, in the quantum proceedings, disallowed the port of deduction claimed by the assessee. He imposed penalty under section 271(1)(c) on the ground that assessee made a claim which was not only incorrect in law but was also wholly without any basis and the explanation furnished by him for making such a claim was not found to be bona fide. Tribunal held that mere making of a claim, which was not sustainable in law, would not, ipso facto, amount to furnishing inaccurate particulars regarding the income of assessee and would, therefore, not automatically result in a penalty order against assessee. Held : The decision in the case of IPCA Laboratory Ltd. v. Dy. CIT 2004 TaxPub(DT) 1472 (SC) : (2004) 266 ITR 521 (SC) (SC), wherein the Supreme Court held that the provisions of section 80AB had an overriding effect over all the other sections in Chapter VI-A including section 80HHC, came subsequent to the filing of the return. Therefore, it could not be said that the claim made by assessee was not bona fide or without any basis. Therefore, Tribunal was justified in deleting the penalty.