Gujarat Insecticides Ltd. Vs DCIT (ITAT Ahmedabad)
ITAT Ahmedabad held that it is settled principle of law that penalty under section 271(1)(c) cannot be levied in case of debatable issue. Accordingly, penalty order quashed and appeal allowed.
Facts- This appeal has been filed by the assessee against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (NFAC) upholding the penalty levied by the Assessing Officer u/s. 271(1)(c) of the Income Tax Act, 1961 amounting to Rs.58,97,870/- in respect of the disallowance of a claim of Rs.1,73,51,790/- as a business loss or bad debt.
Conclusion- Held that that mere disallowance of a claim does not automatically lead to the conclusion that the assessee furnished inaccurate particulars of income. Thus, penalty is not warranted on issues where a substantial question of law exists, indicating that the matter is not free from doubt. Accordingly, we quash the penalty order under section 271(1) (c) of the Act.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal has been filed by the assessee against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (NFAC) [hereinafter referred to as “CIT(A)”], dated 26.03.2024, upholding the penalty levied by the Assessing Officer [hereinafter referred to as “AO”] under Section 271(1)(c) of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] amounting to Rs.58,97,870/- in respect of the disallowance of a claim of Rs.1,73,51,790/- as a business loss or bad debt.
