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In the present case, it is an admitted position where the appellant had not furnished the return within time allotted to him under sub sections (1) and (2) and therefore, his case clearly falls within the provision of section 139 (4). Section 139 (5) merely stipulates that it is applicable to any person who has furnished the return under sub sections (1) or (2). In the present case, therefore, if the appellant had filed the return in time, and thereafter had filed a rectified return, he could be permitted to do so under the said provision. Therefore, from the aforesaid provisions it can be seen that the Legislature in its wisdom had intended to give the benefits of filing a revised return only to those persons who fall within the four corners of section 139 sub sections (1) and (2) of the said Act. If the legislature had intended to also give the same benefits to an assessee who had not furnished the return within time, it would have said so in sub clause (5). The very fact that sub clause 4 is not referred to in sub clause (5) clearly indicates the intention of the legislature.
A glance at the provisions of section 271(1)(c) of the Income-tax Act, 1961, suggests that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The meaning of the word “particulars” used in section 271(1)(c) would embrace the details of the claim made.
It is now settled law that in order to sustain a penalty under section 271(1)(c) the department must establish that the receipt of the amount in dispute constitutes income of the assessee and part from the falsity of the explanation given by the assessee, the department must have before it cogent material or evidence from which it can be inferred that the assessee has consciously concealed the particulars of his income or has deliberately furnished inaccurate particulars in respect of such income.
Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars.
The provision made for advance tax of Rs.23,50, 000/- debited in the P&L account not added back to income is bonafide mistake. Assessee paid advance tax in the month of March only. It is the first time that provision was debited in P&L account. Had there been any intention to file inaccurate particulars then the assessee could not have paid the advance tax in the last month of assessment year. The assessee concern is a firm which is not having expert chartered accountants at its payroll. Further, this was the first year in which the provision for taxation was debited to the P&L account.
Tribunal decision in the case of ITO Vs Gyani Exports as reported in 94 TTJ 557 wherein, it was held that gain from foreign exchange fluctuation as eligible for deduction u/s 80HHC. No contrary decision was brought to our notice by Ld. D.R. and hence, on this issue also, we decline to interfere in the order of Ld. CIT(A).
The issue as to whether there was concealment of particulars of income on the part of the assessee so as to attract penalty under section 271(1)(c) depends on the acceptability of the explanation of the assessee that the mistake in this regard was inadvertent due to his ignorance of Indian Income-tax law, hence there was bona fide reason for the same.
Agility Logistics (P.) Ltd. V/s. DCIT (ITAT Mumbai) Mere addition on account of transfer pricing adjustment cannot automatically lead to levy of penalty u/s. 271(1)(c)
RL is a tax resident of Mauritius and in support of this, tax residency certificate has been furnished. This fact has also been accepted by the learned DR in the written submission. It is also undisputed fact that, based on this tax residency certificate, the RL has applied for exemption certificate for grant of 100% DIT relief, which was granted by the Assessing Officer vide certificate dated 9-6-2000 upto the period of 31-3-2001 i.e. upto AY 2001-2002 (copy of which has been placed in the assessee’s paper book at page 5 filed on 8-11-2009). It was based on this certificate, that the assessee had sought tax relief in the return of income.
We do not think that such can be the interpretation of the concerned words. The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. In the case under consideration it stands established that the issue resulting in the determination of higher income u/s 143(3) was clearly debatable. Respectfully following the ratio of the above judgments which have held that penalty is not imposable on debatable issues or claims/deductions disallowed on account of varying legal interpretations it is held that penalty u/s 271(1)(c) is not imposable in the present case. Accordingly the penalty order u/s 271(1)(c) dated 29.01.2009 imposing the penalty of Rs. 520969/- is quashed.
