INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Leviability - Addition deleted in quantum appeal -

AO denied assessee's claim of deduction under section 80-IB(10) on the ground that the area of the plot on which the housing project was taken up, was less than one acre. AO taking into consideration of entries in 7/12 extracts of the land records in respect of which the development rights were obtained by the assessee, held that the total area of the land was only 4,000 sq. meters. Subsequently, the AO levied under section 271(1)(c) for furnishing of inaccurate particulars of income. Whereas, it was the contention of the assessee that the actual area available on which the housing project was taken up was 4,722 sq. meters, the actual area in possession of the assessee, which was more than one acre. Held: AO concluded that the size of the land was less than one acre based on the entries in 7/12 extract. However, it was found that the actual area was more than one acre, i.e., 4,722 sq. meters, which was more than the area mentioned in 7/12 extract. Further, considering such fact, the Tribunal allowed the appeal of the assessee in quantum appeal. Thus, since the addition made in the assessment was deleted in the quantum appeal, no penalty could be levied. Even otherwise, the penalty under section 271(1)(c) was levied on account of furnishing of inaccurate particulars of income, but in assessment order as well as penalty order, there was no finding given by the AO as to how and in what manner, the assessee furnished inaccurate particulars of income leading to addition except making a bald charge against the assessee that assessee had furnished inaccurate particulars of income. Further, it was a case of mere disallowance of claim made, which would not tantamount to furnishing of inaccurate particulars of income nor it was a false claim, as the assessee made a bona fide claim and contended vehemently the findings of the AO that the size of the land was less than one acre. Hence, it was not a fit case to levy penalty under section 271(1)(c) and accordingly, the same was deleted.

Relied:CIT v. Balbir Singh (2008) 304 ITR 125 (P&H) : 2008 TaxPub(DT) 777 (P&H-HC), National Textiles v. CIT (2001) 249 ITR 124 (Guj-HC) : 2001 TaxPub(DT) 677 (Guj-HC)Nainu Mal Het Chand v. CIT (2007) 294 ITR 185 (All-HC) : 2007 TaxPub(DT) 687 (All-HC), CIT v. T. Abdul Majeed (1998) 232 ITR 50 (Ker-HC) : 1998 TaxPub(DT) 237 (Ker-HC), CIT v. Super Metal Re-Rollers Pvt. Ltd. (2004) 265 ITR 82 (Del) : 2004 TaxPub(DT) 968 (Del-HC), Diwas Enterprise v. CIT (2000) 246 ITR 571 (Del) : 2000 TaxPub(DT) 419 (Del-HC), CIT v. Shivnarayan Jamnalal & Co. (1998) 232 ITR 311 (MP) : 1998 TaxPub(DT) 120 (MP-HC) and CIT v. Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158 : 2010 TaxPub(DT) 1683 (SC). Distinguished: CIT v. Escorts Finance Ltd. (2008) 292 ITR 658 (Del-HC) : 2007 TaxPub(DT) 0301 (Del-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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