Case Law Details
Gulab Impex Enterprises Pvt. Ltd. Vs ACIT (ITAT Delhi)
The case of Gulab Impex Enterprises Pvt. Ltd. Vs ACIT (ITAT Delhi) presents a crucial exploration of the penalty provision under section 271(1)(c) of the Income Tax Act, 1961. The crux of the dispute lies in determining whether the mere acceptance of disallowance equates to furnishing inaccurate particulars of income, subsequently justifying the imposition of a penalty.
The assessee, a corporate entity, initially didn’t claim a penalty of Rs.5,00,000 imposed by SEBI as a deduction in their original return. However, in the revised return filed during the assessment proceedings, the assessee claimed this amount as a deduction. The Assessing Officer disallowed this deduction based on the nature of the payment as a penalty, not permissible under section 37(1) of the Act. Despite the assessee’s acceptance of the disallowance, a penalty was imposed under section 271(1)(c) alleging that the assessee had furnished inaccurate particulars of income.
The ITAT Delhi noted that the assessee had provided all relevant particulars related to the SEBI payment in the original return of income and audit report. Therefore, it held that the assessee’s claim of the payment as a deduction in the revised return could not be treated as furnishing inaccurate particulars of income. Additionally, the ITAT highlighted that the classification of the payment made to SEBI as an offence or prohibited by law is a highly debatable issue, and mere acceptance of the disallowance does not necessarily mean that inaccurate particulars of income were furnished.
ITAT Delhi’s decision in this case underscores the nuanced interpretation of section 271(1)(c) of the Income Tax Act. It highlights that the mere acceptance of a disallowance does not automatically lead to the conclusion of furnishing inaccurate particulars of income, thereby warranting a penalty.
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