The Tax Publishers2019 TaxPub(DT) 3020 (Del-Trib)

INCOME TAX ACT, 1961

Section 271(1)(c)

Where on account of appeal pending before Tribunal for earlier years, assessee claimed deduction under both section 35(1) and section 36(1)(xii) with the expectation to get benefit under one of the sections, then disallowance under one of the sections could not lead to inference as regards concealment or furnishing of inaccurate particulars of income so as to levy penalty under section 271(1)(c).

Penalty under section 271(1)(c) - Concealment or furnishing of inaccurate particulars - -

Assessee claimed deduction under section 36(1)(xii), and also claimed deduction under section 35(1) AO declined both the deduction. On further appeal, CIT (A) deleted disallowance of deduction under section 36(1)(xii) but sustained the disallowance under section 35(1) while giving effect to appellate order under section 250/143(3) AO levied penalty under section 271(1)(c) in respect of the disallowance sustained under section 35(1). Assessee claimed that at the time of filing return of income for the years under consideration, earlier years cases were pending before Tribunal and thus assessee had no option but to claim both the deduction as in the event section 36(1)(xii) had not been allowed, deduction under section 35 was to be allowed. But, AO disallowed deduction under both sections 36(1)(xii) and 35(1). The Tribunal had allowed the benefit of deduction under section 36(1)(xii). The assessee submitted that had benefit of decision of Tribunal been available to assessee, it would not have claimed deduction under section 35(1). According to assessee, at the time of filing of return of income, the fate of allowability of deduction under section 36(1)(xii) was not known/was not clear and assessee filed its return of income by way of normal claim and thus assessee neither furnished inaccurate particulars nor concealed any of its income so as to attract the provision of section 271(1)(c). Held: Mere making of a claim, which was not sustainable in the law by itself would not amount to furnishing inaccurate particulars of income. Assessee had duly explained before AO the reasons as to why deduction under section 35(1) had been claimed, accordingly, levy of penalty under section 271(1)(c) was not justified.

Relied on:CIT v. Reliance Petro products Ltd. 2010 TaxPub(DT) 1683 (SC) : (2010) 322 ITR 158 (SC)

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2005-06 to 2007-08



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