INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Concealment or furnishing of inaccurate particulars - Leviability - Disallowance of assessee's claim also being debatable issue

Assessee claimed deduction under section 10A in respect of 13 mother licenses, as the undertakings eligible for said deduction, whereas assessee revised the return claiming deduction under section 10A considering 31 undertakings registered with STPI authority under 13 mother licenses as independent undertakings eligible for deduction under section 10A. AO held that enhanced claim of deduction by way of including 18 units as independently entitled to the benefit so made, was not tenable. Accordingly, AO levied penalty under section 271(1)(c) as regards disallowance of deduction claimed under section 10A. Held:/i> High Court admitted substantial question of law relating to the claim of assessee to avail of benefit of section 10A for the assessment year 2005-06 on the ground that enhancement in claim so made was tenable or not. This very fact showed that the issue involved in this matter was debatable issue. Further, Form No. 56F duly signed by Chartered Accountant justified the plea of bona fide belief on part of assessee. it was not the allegation against assessee that any material fact relating to the income had to be unearthed with any efforts of the revenue. It was only on the basis of material furnished by assessee, claim of assessee for benefit under section 10A in respect of 31 units as independent, was rejected. Mere preferring a claim which was unacceptable to revenue could not ipso facto lead to levy of penalty. Therefore, penalty was deleted.