Section 271(1)(c) of Income Tax Act, 1961 empowers an Assessing Officer to impose penalty if he is satisfied that any person has concealed the particulars of his income or furnished inaccurate particulars of such income.
In a case before the Assessing Authority, an assessment order dated 23.03.2023 was issued therein disallowing an item of expenditure namely, interest on delayed payment of TDS. The Assessee, accepted the said disallowance and hence, the said assessment order attained finality.
However, the Assessing Officer initiated penalty proceedings invoking Section 271(1)(c) of the Act, therein averring that, Assessee had furnished inaccurate particulars of such income as per details given in the assessment order.
Upon request for virtual hearing, the AO granted us the hearing opportunity on 20.09.2023.
Submissions on behalf of Noticee were as under:
1. That, Assessment order u/s 147 read with Section 144B of the Act, notes in one line that penalty u/s 271(1)(c) is being initiated for furnishing of inaccurate particulars of income. That, as such, no satisfaction is recorded by the Ld. Assessing Officer if in fact inaccurate particulars of income have been furnished.
2. That, in the present case, the Ld. AO has disallowed the expenditure incurred by Noticee for payment of Interest on late payment of TDS. That, Noticee availed the deduction of aforesaid expenditure in bona fide, and that it furnished the particulars of the aforesaid deduction duly in its Income Tax Return. Since the Noticee has fully and accurately furnished the particulars of the expenditure in respect of which deduction is availed by it, there is no scope for imposition of penalty u/s 271(1)(c) inasmuch as the pre-conditions are not fulfilled.
3. That, the Hon’ble Supreme Court in CIT, Ahmedabad v. Reliance Petroproducts Pvt. Ltd., (2010) 11 SCC 762 has held that merely because the Assessee had claimed the expenditure, which claim was not acceptable or accepted to the Revenue, that by itself would not, attract the penalty under Section 271(1)(c). It was further held that mere making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars.
4. In present case, there is no finding that details supplied by Assessee in its return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting penalty u/s 271(1)(c).
Order of the Assessing Authority
The Assessing Authority vide Order u/s 271(1)(c) of the Income Tax Act, 1961, dated 25.09.2023, after considering our submissions, and replies concluded that it is a fit case for non-imposition of penalty u/s 271(1)(c) of the Act, and accordingly dropped the penalty proceedings.
[DIN of Order: ITBA/PNL/F/271(1)(c)_1/2023-
24/ 1056507272 (1)]
