INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Disallowance under section 43B - Imposition of -

During scrutiny assessment, AO noted that assessee had shown VAT payable and assessee had not filed the proof of payment of the same. Accordingly, AO asked assessee to furnish the details. In response, assessee filed revised computation of income disallowing the VAT payable under section 43B. AO completed the assessment by making an addition on account of disallowance under section 43B. AO initiated penalty proceedings under section 271(1)(c). CIT(A) confirmed the penalty levied by AO. Held: Once the claim of assessee was not found to be bogus or false but because of reason that assessee could not pay the amount as required under section 43B, the same was to be disallowed. The disallowance under section 43B was only because of technical reason of non-payment of the amount and not because of reason that the claim itself was not an allowable claim. As relevant details and facts were disclosed by assessee and available before AO, then mere disallowance under section 43B would not amount to concealment of income or furnishing inaccurate particulars of income attracting the levy of penalty under section 271(1)(c).

Relied:CIT v. Reliance Petroproducts (P) Ltd. (2010) 322 ITR 158 (SC) : 2010 TaxPub(DT) 1683 (SC), Sree Krishna Electricals v. State of Tamil Nadu & Anr. (2009) 23 VST 249 CIT v. Virgo Marketing (P) Ltd. (2008) 171 Taxman 156 (Delhi) : 2008 TaxPub(DT) 1518 (Del-HC) and CIT v. Manu Engineering Works (1980) 122 ITR 306 (Guj.) : 1980 TaxPub(DT) 0483 (Guj-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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