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CIT Vs. Reliance Petroproducts (P) Ltd.

Source : 322 ITR 158 (SC)

Issue : Whether penalty u/s 271(1)(c) of the Act is leviable when addition is made on account of low gross profit

Apr 6, 2011


Held

A glance of section 271(1)(c) would suggest that in order to be covered, there has to be concealment of the particulars of income. Secondly, assessee must have furnished inaccurate particulars of income. The word “particulars” used in section 271(1)(c) would embrace the meaning of the details of the claim made. Addition on account of gross profit is an estimation made by assessing officer. In order to expose assessee to penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can the making of an incorrect claim in law tantamount to furnishing inaccurate particulars. It has been observed that if the contention of the Revenue is accepted then in case of every Return where the claim made is not accepted by the AO for any reason, the assessee will invite penalty u/s 271(1)(c) & that is clearly not the intendment of the Legislature.

Merely because the gross profit as claimed by assessee has not been accepted by Revenue, penalty u/s 271(1)(c) of the Act is not attracted. Mere making of claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of assessee