Relief to Reliance: Sec 271(1)(c) of the Income Tax Act will not be attracted just because assessee claim the expenditure

Relief to Reliance: Sec 271(1)(c) of the Income Tax Act will not be attracted just because assessee claim the expenditure

Issue

Appeal filed before the Delhi HC to challenge the order dated 28.01.2019 passed by the Income Tax Appellant Tribunal, Delhi wherein the demand of penalty levied by the Assessing Officer has been set aside.  

Facts  

• The respondent owns the Giesecke & Devrient Pt. Ltd., the respondent renders software development agreements, wherein it develops software applications software(s) for G & D GmbH. As a part of this, the respondent is also engaged in the business development of smartcard-related applications. 
• The appellant was also engaged in the business of wholesale trading of currency verification and processing systems (‘CVPS’), their maintenance and providing SIM card systems to telecommunication operators. 
• The respondent filed its return of income for the Assessment Year 2007-08. Pursuant to the order of the Transfer Pricing Officer and subsequently the Dispute Resolution Panel, the Assessing Officer made an addition of Rs.25,31,59,381/-.  
• Aggrieved by the assessment order dated 24.10.2011, the respondent filed an appeal before the learned ITAT wherein the ITAT upheld the Provision for software development services to be Rs. 2,68,68,098/- and Purchase of raw material for SIM Card assemble to be Rs.1,90,83,391/- and dismissed the other adjustments in the appeal.  
• Thereafter the assessing officer issued a show-cause notice dated 06.11.2013 under Section 274 read with Section 271(1)(c) of the Income Tax Act, 1961 and passed the order dated 26.11.2013, levying a penalty of Rs.1,54,67,271/- (Rupees One Crore Fifty-Four Lakhs Sixty-Seven Thousand Two Hundred Seventy-One) on the respondent. The respondent filed an appeal challenging the above order, which was dismissed by the learned CIT(A). 
• The respondent challenged the said order before the learned ITAT, which appeal now stands allowed by the impugned order. 

Findings  

Supreme Court in case of Commissioner of Income Tax, Ahmedabad vs. Reliance Petroproducts Pvt. Ltd., held that for the purpose of invoking Section 271(1)(c) of the Act, there has to be a concealment of particulars in the income of the assessee and the assessee must have furnished inaccurate particulars of his income. Making an incorrect claim in law cannot furnish inaccurate particulars under Section 271(1)(c) of the Act. Mere making of a claim which is not sustainable in law, by itself, will not furnish inaccurate particulars regarding income of the assessee. Merely because, the assessee had claimed an expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not attract the penalty under Section 271(1)(c) of the Act.  

Judgement  

The Delhi HC dismissed the appeal by stating that no infirmity in the impugned order passed by the learned ITAT. Accordingly, no substantial question of law arises for consideration in the present appeal.  To Read More Download PDF Given Below: