Facts of the Case:

The appeals by the revenue arose from the common order dated 22.06.2012 of the Income Tax Appellate Tribunal concerning assessment years 2003-04 and 2004-05. The disputes involved penalties under Section 271(1)(c) imposed by the Assessing Officer:

  • Assessment Year 2003-04:
    • Original deduction claimed under Section 80-IB: ₹2,52,41,632/-
    • Revised return claimed deduction: ₹2,67,48,176/-
    • Final accepted deduction: ₹2,52,41,632/-
    • Penalty imposed: ₹15.4 lakhs
  • Assessment Year 2004-05:
    • Penalty imposed: ₹9.3 lakhs
    • Dispute arose due to disallowance of enhanced deduction claimed under Section 80-IB

The Commissioner of Income Tax (Appeals) had deleted the penalties, leading the revenue to appeal before the Tribunal.

Issues Involved:

  1. Whether the mere making of a claim, which is later reduced, amounts to furnishing inaccurate particulars of income under Section 271(1)(c).
  2. Applicability of Section 271(1)(c) when deductions under Section 80-IB are disallowed or scaled down. 

Petitioner’s Arguments (Revenue):

  • Penalties under Section 271(1)(c) were justified as the respondent claimed deductions that were ultimately not sustainable.
  • Disallowance of the claimed enhanced deductions constituted furnishing inaccurate particulars of income.

Respondent’s Arguments (Jakson Ltd.):

  • The deductions claimed in revised returns were not incorrect; only scaled down during assessment.
  • Mere filing of claims, even if later adjusted, does not amount to furnishing inaccurate particulars under Section 271(1)(c).

Court Findings / Order:

  • The Tribunal relied on the Supreme Court decision in Commissioner of Income Tax v. Reliance Petroproducts (P) Ltd. (2010) 322 ITR 158 SC, which clarified that:
    • Penalty under Section 271(1)(c) applies only if the particulars in the return are inaccurate, incorrect, or false.
    • A claim not sustainable in law, by itself, does not amount to furnishing inaccurate particulars.
  • The Delhi High Court observed:
    • Downscaling of Section 80-IB deductions does not equate to furnishing inaccurate particulars.
    • No finding was made regarding which part of the income was concealed or inaccurately reported.

Decision: Appeals dismissed. No substantial question of law arises.

Important Clarifications:

  • Reliance Petroproducts (P) Ltd. case establishes that a mere unsustainable claim in return does not attract Section 271(1)(c) penalty.
  • Mens rea (intention) is irrelevant; only accuracy of particulars is considered.
  • Revenue cannot levy penalty solely due to partial disallowance of deductions.

Sections Involved:

  • Section 80-IB, Income Tax Act, 1961
  • Section 271(1)(c), Income Tax Act, 1961

Link to download the order - https://delhihighcourt.nic.in/app/case_number_pdf/2013:DHC:437-DB/RVE29012013ITA482013.pdf

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