Mere Rejection of a Claim would not attract Penalty

1 This appeal is filed by the Revenue challenging the judgement of the Income Tax Appellate Tribunal dated 19.10.2016.Following question is presented for our consideration:

“ Whether in the facts and circumstances of the case and in law, the I.T.A.T is justified in not upholding the penalty u/s.271(1)(c) of the Act imposed by the Assessing Officer and upheld by the CIT(A), without appreciating that the assessee had deliberately did not offer the revenue receipt amounting to Rs.2,60,00,000/­ to tax and claimed the same as capital receipt which amounted to filing inaccurate particulars of income?”

2 As can be seen from the question, the issue pertains to penalty imposed by the Assessing Officer and confirmed by CIT(A) and the respondent­the assessee which was deleted by the Tribunal.For the assessment year 2003­04, the assessee had filed return of income in which one of the issues pertain to receipt of Rs.2.60 crores by the assessee. For transfer of intellectual property right, assessee claimed that such receipt was exempt from tax and accordingly did not offer it to tax in the return filed for such year. The Assessing Officer was of the view that such receipt was in the nature of capital gain and had to be taxed accordingly. The order of Assessing Officer was confirmed by the CIT(A) and the Tribunal.We are informed that the assessee’s appeal against the judgement is admitted and pending before the High Court.