Section 271(1)(c) of the income tax Act, 1961 — Penalty — Concealment Penalty — Mere making of a claim which is disallowed in quantum proceedings, cannot by itself be a ground to impose penalty under Section 271(1)(c).[2019] 52 ITCD 028 (BOM)
Facts: Being aggreived of the order of Tribunal, Revenue went on appeal before High Court and raised the question of law that whether on the law and on the facts and in the circumstances of the case claiming an expenditure u/s 37 of Income Tax Act 1961, that was not incurred to earn the income in the relevant previous year, tantamounts to furnishing of inaccurate particulars of income for the purpose of section 271(1)(c) of the Act?
Held, that it was found from the assessment year starting with Assessment Year 1990-91 upto the subject Assessment Year 2007-08, assessee had made a claim for deduction of expenses on account of advertisement and sales promotion in the year it was incurred even when the income was offered to tax later under the project completion method of accounting. The Assessing Officer in the Assessment Year 2006-07 for the first time disputed the above method of claiming expenses. The Assessing Officer adopted a methodology to postpone allowability of claim for deduction of expenses in the year in which the income is offered to tax. The question, therefore, is whether making such a claim on the basis of accepted practice would amount to furnishing inaccurate particulars of income within the meaning of Section 271(1)(c). In the case of Commissioner of Income Tax Vs. Mere making of a claim which is disallowed in quantum proceedings, cannot by itself be a ground to impose penalty under Section 271(1)(c). The fact that the assessee was following the above method since 1990-1991 till the subject Assessment Year and there was no dispute in respect thereof save for the Assessment Year 2006-07 and the subject assessment year. This fact itself would militate against imposition of any penalty upon the assessee on the ground of furnishing inaccurate particulars of income. The Tribunal was, therefore, right in taking note of this fact and the decision of the Supreme Court in the case of Reliance Petroproducts Pvt. Ltd. (supra) while allowing the appeal. We find no error in the view taken by the Tribunal. Thus, the appeal raises no substantial question of law and the same is dismissed.