The Tax Publishers2020 TaxPub(DT) 1755 (Guj-HC) : (2020) 424 ITR 0098

INCOME TAX ACT, 1961

Section 271(1)(c)

A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of assessee. Hence, the penalty levied under section 271(1)(c) with regard to the incorrect claim made by the assessee was liable to be deleted.

Penalty under section 271(1)(c) - Leviability - Incorrect claim by assessee - Whether incorrect claim would tantamount to furnishing inaccurate particulars

AO noticed that certain expenditure on account of professional fees, travelling expenses, etc., with respect to new power projects were wrongfully claimed as revenue expenditure by assessee-company. Accordingly, the expenditure so claimed was disallowed on account of treating the same as capital expenditure. Subsequently, the AO levied penalty under section 271(1)(c) with regard to incorrect claim made by the assessee alleging that the assessee furnished inaccurate particulars of income.Held: It is settled position that making an incorrect claim by any stretch of imagination would not tantamount to furnishing inaccurate particulars. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing the inaccurate particulars. Therefore, in instant case, as claim was made as revenue expenditure, but in fact, it was found to be capital expenditure that by itself would not be sufficient to arrive at the conclusion that the case was one of inaccurate particulars. Hence, the penalty levied under section 271(1)(c) with regard to the incorrect claim made by the assessee was deleted.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :



IN THE GUJARAT HIGH COURT

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