INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Validity - Deliberate and conscious claim of deduction under sections 80G and 80-IB made by assessee to evade tax -

After completing assessment, penalty under section 271(1)(c) read with section 274 was levied on the assessee by the AO holding that assessee had made deliberate and conscious claim under section 80G and 80-IB deduction to evade tax after arriving at satisfaction CIT(A) : confirmed the penalty by dismissing the appeal.Held: Facts go to prove that penalty proceedings in this case were initiated on the basis of valid satisfaction. Assessee-company had not filed any revised return within the period prescribed under section 139(1), rather withdrew the claim during the assessment proceedings by moving letter before the AO.The factum of claiming inadmissible deduction under sections 80-IB and 80G and then withdrawing the same when the case of the assessee put under scrutiny proceedings was nothing but a deliberate and conscious decision of the assesseec-ompany to furnish inaccurate particulars of income by claiming wrong deduction. This was a case clearly distinguishable from the case of Reliance Petro Products Pvt. Ltd. because in this case, claiming of inadmissible deductions under section 80-IB and 80G was not a wrong claim rather a deliberate and conscious scheme to evade the tax by furnishing inaccurate particulars of income, if not caught in scrutiny. Assessee in this case had never revised its return during the period prescribed under section 139(1), rather withdrew the claim during assessment proceedings when confronted by the AO. So, by no stretch of imagination, the claim made by the assessee for deduction under sections 80-IB and 80G can be considered as inadvertent claim rather it was deliberate and conscious claim made to evade the taxes. Had there been any inadvertent mistake on the part of the assessee company to claim such deductions, assessee company would have filed revised return within the prescribed period, but no such revised return has been filed. At no point of time, either before assessment proceedings or during appellate proceedings assessee had come forward with claim that it had acted bona fide while making the inadmissible claim under sections 80-IB and 80G. Furthermore, when it is proved on record that the claim of deductions made by the assessee-company under sections 80-IB and 80G was not only incorrect but a mala fide, Explanation 1 to section 271(1)(c) was attracted to confirm the penalty levied on the assessee-company. There was no illegality or perversity in the order passed by the AO levying the penalty on the assessee qua additions on account of inadmissible claim of deductions under sections 80-IB and 80G, hence impugned order passed by the CIT(A) was, therefore, confirmed to that extent.

Distingushed:Varkey Chacko v. CIT (1993) 203 ITR 885 (SC) : 1993 TaxPub(DT) 1493 (SC), CIT v. Mohinder Lal (1987) 168 ITR 101 (P&H) : 1987 TaxPub(DT) 0721 (P&H-HC) & Mrs. Indrani Sunil Pillai v. ACIT, Circle 21 (1), Mumbai ITA No.1339/Mum./2016 ; Reliance Petro Products Pvt. Ltd. (2010) 322 ITR 158 (SC) : 2010 TaxPub(DT) 1683 (SC)Followed:CIT v. Usha International Ltd. (2010) 254 CTR 509 (Del) : 2013 TaxPub(DT) 244 (Del-HC). Relied:CIT v. Zoom Communication (P) ltd. (2010) 327 ITR 510 (Del) : 2010 TaxPub(DT) 1957 (Del-HC).

REFERRED :

FAVOUR : Against the assedssee.

A.Y. : 2006-07

INCOME TAX ACT, 1961

Section 271(1)(c)

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