No Penalty on addition based on decision not available at the time of filing ROI

The revenue authorities had imposed penalty on the ground that deduction under section 80HHC of the Act was wrongly claimed. The Tribunal however, deleted such penalty. The Tribunal noted that tax liability against the assessee was confirmed on the basis of the decision of the Apex Court in the case of  CIT v. Ravindranathan Nair, 295 ITR 228. The Tribunal noted that such decision was not available when the assessee filed the return. On such basis,   the Tribunal was prompted to delete the penalty.

In our view, the Tribunal committed no error.   The Tribunal relied on the decision in the case of CIT v. Reliance Petro Products Pvt.Ltd., 322 ITR 158 wherein it has been highlighted that filing of wrong claim per se would not give rise to penalty proceedings.

HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL No. 397 of 2012

COMMISSIONER OF INCOME TAX
Versus
FRIENDS SALT WORKS AND ALLIED INDUSTRIES

Date : 17/09/2012

ORAL ORDER

(Per : HONORABLE MR. JUSTICE AKIL KURESHI)

Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal (‘Tribunal’ for short) dated 15.12.11 raising following question for our consideration :

“Whether the Appellate Tribunal has substantially erred in deleting the Penalty of Rs.54,58,500/- levied    u/s.271(1)(c) of the I.T. Act ignoring the fact that the assessee has deliberately furnished inaccurate particular, while claiming deduction u/s.80HHC regarding total turnover?”

The issue pertains to penalty under section 271(1)(c) of  the Income Tax Act, 1961 (‘the Act’ for short). The revenue authorities had imposed penalty on the ground that deduction under section 80HHC of the Act was wrongly claimed. The Tribunal however, deleted  such penalty. The Tribunal noted that  tax liability against the assessee was confirmed on the basis of the decision of the Apex Court in the case of  CIT v. Ravindranathan Nair, 295 ITR 228.  The Tribunal noted that such decision was not available when the assessee filed the return. On such basis,   the Tribunal was prompted to delete the penalty.

Having heard the learned counsel for the Revenue, we do not find any question of law arising. The Tribunal noticing that the issue of tax liability was not yet cleared and  got cleared only when the decision of the Apex Court was declared, which judgment  was not available when the assessee  filed its return, in our view, the Tribunal committed no error.   The Tribunal relied on the decision in the case of CIT v. Reliance Petro Products Pvt.Ltd., 322 ITR 158 wherein it has been highlighted that filing of wrong claim per se would not give rise to penalty proceedings.

In the result, tax appeal is dismissed.