INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Claim of deduction under section 80-IB(10) - Imposition of -

Assessee was engaged in business of construction, development and redevelopment of real estate and claimed deduction under section 80-IB(10), which was found to be untenable by AO. Deduction was denied primarily on the ground that it was related to profits and gain earned from a housing project, which was approved by local authority and claim was not within the qualifying provisions of section 80-IB(10). Subsequently, AO passed an order holding assessee guilty of default under section 271(1)(c) qua the wrong claim of deduction under section 80-IB(10). CIT(A) upheld the order of AO. Held: The claim of assessee for deduction under section 80-IA came to be rejected in the quantum assessment proceedings. In the penalty proceedings, Tribunal noted that there was no suppression of facts or misrepresentation of facts by assessee even when the claim was denied in the quantum assessment proceedings. It deleted the penalty imposed under section 271(1)(c) which was affirmed in the case of Petels Engineers Ltd. (42 Taxmann.com 433 (Bom) : 2014 TaxPub(DT) 0508 (Bom-HC)) and specifically noted that claim of assessee under section 80-IA was made under a bona fide belief, therefore, penalty under section 271(1)(c) was not sustainable.

Followed:Price Waterhouse Coopers v. CIT (2012) 348 ITR 306 (SC) : 2012 TaxPub(DT) 2967 (SC) CIT v. Reliance Petroproducts Ltd. (2010) 322 ITR 158 (SC) : 2010 TaxPub(DT) 1683 (SC) CIT v. Petals Engineers (P.) Ltd. (2014) 42 Taxmann.com 433 (Bom) : 2014 TaxPub(DT) 0508 (Bom-HC)

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

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