Penalty cannot be imposed without AO’s Finding on ‘Inaccurate Particulars’

CIT Vs. Mahanagar Telephone Nigam Ltd (Delhi High Court)– A.O. having failed to record a finding that the assessee had furnished inaccurate particulars, the imposition of penalty under Section 271(1)(c) of the I.T. Act was a complete non-starter. This finding of fact has been affirmed by the Tribunal and we find no reason to disagree with the same. A mere erroneous claim made by an assessee, though under a bonafide belief that, it was a claim which was maintainable in law, cannot with more, lead to an imposition of penalty.

In the instant case it is quite evident that both claims were made under the belief that they were maintainable in law. In regard to contributions made to the funds, the assessee genuinely differed with the statutory auditor. Similarly, with regard to claim of higher rate of depreciation on vehicles, it was based on the premise that the vehicles used by the assessee were in the nature of plant and machinery as these were the vehicles which were used to correct faults and to provide other services to its customers. The denial by the A.O. of these claims would not, in our view, lead to the conclusion that the assessee had furnished inaccurate particulars.