Proton Positive Health Care India Private Limited Vs ACIT (ITAT Hyderabad)
Mere Failure to Substantiate Is Not “Inaccurate Particulars” – 56(2)(viib) Not Applicable to Holding–Subsidiary Share Issue
Hyderabad Tribunal dealt with penalty u/s 271(1)(c) imposed on two issues—unproved sundry creditors of Rs.6,53,613 & share premium addition of Rs.77,46,883 u/s 56(2)(viib). In assessment, AO added creditors due to lack of PAN/address details & taxed share premium due to absence of valuation certificate. Assessee did not appeal quantum. AO levied penalty treating both issues as furnishing inaccurate particulars. CIT(A) dismissed appeal for total non-compliance.
Tribunal examined material & held that though Assessee failed to substantiate creditors, all entries were in books, ledger accounts were produced, & Revenue brought no evidence showing particulars were false. Relying on Reliance Petroproducts (SC) & Upendra V. Mithani (Bom HC), Tribunal held that inability to prove claim does not amount to furnishing inaccurate particulars.
On 56(2)(viib), Tribunal held that deeming provision itself was inapplicable since shares were allotted by subsidiary to its 100% holding company; following Solitaire BTN Solar, BLP Vayu, Ozone India, Tribunal held no income arises in such intra-group capital structuring & therefore penalty cannot survive. Consequently, entire penalty u/s 271(1)(c) was vacated & CIT(A)’s dismissal set aside. Appeal allowed.
