INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Validity - Tax liability which arose on account of retrospective amendment in law whether falls under the mischief of section 271(1)(c) -

Assessee-AOP (Trust) was engaged in the activity of promoting the game of cricket. AO alleged that assessee had furnished inaccurate particulars of income and wrongly claimed exemption under sections 11 and 12, which was not available to cricket association on the nature of income generated by it. Assessee contended that there was difference of opinion regarding applicability of proviso to section 2(15) read with section 13(8) in respect of such cricket bodies, therefore, action of assessee was to be regarded as bona fide. Held: The action of AO failed on both counts, namely; the penalty is not applicable where the issue involved is so complex and debatable and assessee had adopted a view which is quite plausible and endorsed favourably by judicial precedents at many instances. Secondly, the income arising on retrospective applicability of section 13(8) inserted by Finance Act, 2012, i.e., at a time when the returns for all the assessment years in question were already filed by assessee could not attract penalty by any stretch of imagination.

REFERRED : CIT v. Reliance Petro-products (P.) Ltd. (2010) 230 CTR 320 (SC) : 2010 TaxPub(DT) 1683 (SC) CIT v. Hindustan Electro Graphites Ltd. (2000) 160 CTR 8 (SC) : (2000) 243 ITR 48 (SC) : 2000 TaxPub(DT) 1316 (SC) CIT v. Yahoo India (P.) Ltd. (2013) 33 taxmann.com 332 (Bom.) Sarabhai Chemicals (P.) Ltd. v. CIT (2002) 257 ITR 355 (Guj.) : 2002 TaxPub(DT) 1170 (Guj-HC) and Gujarat Cricket Association v. JCIT (Exemptions) [ITA No. 1257/Ahd/2013 & Ors., Order, dated 24-1-2019] : 2019 TaxPub(DT) 1108 (Ahd-Trib)

FAVOUR : In assessee's favour

A.Y. :

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