In the case of: ITO Vs MAHAVIR CYCLE INDUSTRIES, Decided by: ITAT, CHANDIGARH, Decided on 24th September, 2009
Gist of decision: No penalty is imposable in respect of vexed legal issues which are debatable or on which two views/opinions are possible. For imposing penalty under s. 271(1)(c), the twin conditions of furnishing of inaccurate particulars or concealment of income has to be satisfied.
Since the claim was made on the advice of an outside expert (being the auditor/ chartered accountant) and there being no mala fides, the same would not result in invoking of s. 271(1)(c). Even otherwise, when there is a bona fide claim made by the assessee, no penalty may be levied. While deleting the penalty, there is a finding in the impugned order that there were divergent opinion on the issue of deduction under s. 80HHC in respect of sale of scrap, therefore, the issue was debatable/ vexed legal issue, wherein two views were possible, the penalty was held to be not justified. In view of the aforesaid facts there is no infirmity in the impugned order, the same is upheld.