INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Leviability - Withdrawal of unsustainable claim made in return of income -

In the original return of income filed, assessee declared LTCG from sale of shares and had claimed the same as exempt under section 10(38). Later on, when the assessment was reopened under section 147, assessee withdrew the claim of exemption and paid taxes accordingly. Therefore, assessee contended that there was no furnishing of inaccurate particulars of income or concealment of income. However, AO and CIT (A) levied penalty under section 271(1)(c) alleging that assessee had not voluntarily offered LTCG to tax. Held: In the instant case assessee declared LTCG and had claimed it as exempt under section 10(38) on the ground that shares have suffered STT, but subsequently withdrew the claim of exemption. This might, at most be considered as an unsubstantiated or wrong claim but it could not be held to be furnishing of inaccurate particulars of income or concealment of income. Hence, no penalty could be levied under section 271(1)(c).

Followed:CIT v. Reliance Petroproducts (P) Ltd. (2010) 322 ITR 158 (SC) : 2010 TaxPub(DT) 1683 (SC)

REFERRED : CIT v. Atul Mohan Bindal (2009) 9 SCC 589: 2009 TaxPub(DT) 2009 (SC), Union of India v. M/s. Rajasthan Spinning & Weaving Mills (2009) 13 SCC 448 : 2009 TaxPub(EX) 1503, Union of India v. Dharamendra Textile Processors (2008) 13 SCC 369 : 2007 TaxPub(DT) 1387 (SC), and Dilip N. Shroff v. Jt. CIT & Anr. (2007) 6 SCC 329 : 2007 TaxPub(DT) 1247 (SC)

FAVOUR : In assessee's favour.

A.Y. :

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