IT: Assessee was not liable for penalty merely because claim for deduction was denied
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[2013] 38 taxmann.com 224 (Bombay)
HIGH COURT OF BOMBAY
Sesa Resources Ltd.
v.
Assistant Commissioner of Income-tax, Circle -1(1)*
S.J. VAZIFDAR AND F.M. REIS, JJ.
TAX APPEAL NO. 42 OF 2012†
OCTOBER 19, 2012
Section 271(1)(c), read with section 10B, of the Income-tax Act, 1961 - Penalty - For concealment of income [Wrong claim, effect of denial of] - Assessment year 2005-06 - Assessee claimed deduction under section 10B which was denied on ground that it was not entitled to same as matter of law - Whether since assessee disclosed all facts relating to claim merely because claim for deduction was denied, assessee could not be subjected to penalty under section 271(1)(c) - Held, yes [Para 5] [In favour of assessee]
CASE REVIEW
CIT v. Reliance Petroproducts(P.) Ltd. [2010] 322 ITR 158/189 Taxman 322 (SC) and CIT v. Aditya Birla Nova Ltd. [IT Appeal No. 3899 of 2010, dated 14-8-2012] (para 6) followed.
CASES REFERRED TO
CIT v. Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158/189 Taxman 322 (SC) (para 6) and CIT v. Aditya Birla Nova Ltd. [IT Appeal No. 3899 of 2010, dated 14-8-2012] (para 6).
Sudin Usgaonkar for the Appellant. Ms. Asha Dessai for the Respondent.
JUDGMENT
Vazifdar, J. - This is an appeal under Section 260A of the Income Tax Act 1961 against the order of the Income Tax Appellate Tribunal (ITAT) dated 13th April, 2011 in ITA No. 44/PNJ/2009 pertaining to the Assessment Year 2005-06.
2. The appeal is admitted on the following question of law :
"Whether on the facts and in the circumstances of the case, the Tribunal was justified in sustaining penalty which was levied merely on the basis that the appellant had made a claim for deduction in its return which was subsequently rejected in assessment proceedings, and when admittedly all the relevant facts necessary for assessment were fully disclosed, supported by a Chartered Accountant's certificate ?"
3. The Tribunal dismissed the appellant's/assessee's appeal against the order of the Commissioner of Income-tax (Appeals) which, in turn, had upheld the order of the Assessing Officer, levying a penalty under Section 271 of the Act.
4. The appellant had claimed a deduction under Section 10B of the Act. The appellant, however, was denied the same. The orders in this regard have attained finality. The question is, whether merely on account thereof the appellant is liable for penalty.
5. There is no dispute that the appellant disclosed all the facts. The appellant did not conceal any facts. Based on the disclosed material, the appellant sought the deduction which was denied on the ground that it was not entitled to the same as a matter of law. The Tribunal was in error in holding that merely because the claim for deduction was denied the appellant is liable to pay a penalty.
6. The question raised is answered in favour of the assessee by the judgment of the Supreme Court in CIT v. Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158/189 Taxman 322 and a judgment of this Court, to which one of us (S.J. Vazifdar, J.) was a party dated 14th August, 2012 in CIT v.Aditya Birla Nova Ltd. [IT Appeal No.3899 of 2010].
7. In the circumstances, the question of law is answered in the negative, in favour of the assessee.
8. The appeal is, therefore, allowed in terms of prayer clause (a). No order as to costs.
USPRegards
Prarthana Jalan
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