Merely Making Unsustainable Claim Will Not Amount To Furnishing Of Inaccurate Particulars Of Income: ITAT

The Pune bench of the Income Tax Appellate Tribunal (ITAT) has held that the mere making of a claim, which is not sustainable by the law itself, will not amount to furnishing inaccurate particulars of income.

The bench of S.S. Vishwanethra (Judicial Member) has observed that the appellant cannot be held guilty of furnishing inaccurate particulars of income, and, therefore, the Assessing Officer was not justified in levying a penalty under Section 271(1)(c) of the Income Tax Act.

The appellant/assessee is a company engaged in the business of executing civil contracts. On November 29, 2014, the Return of Income for the fiscal year 2014-15 was filed, declaring a total income of $ 0.The assessment was completed by the assessing officer. The AO decided against allowing interest.

The additions made by the assessing officer are not agitating the appellate proceedings. Thus, the additions made by the assessing officer had attained finality. Following that, the Assessing Officer initiated penalty proceedings and levied a penalty for the disallowance of interest, concluding that the appellant was guilty of concealing inaccurate income particulars. The AO rejected the appellant's contention that no disallowance was required because the advances to the sister concern were made with personal funds for business purposes.

The ITAT held that when an assessee is not agitated, the addition in the appellate proceedings does not amount to either concealment of income or furnishing of inaccurate particulars of income.

The tribunal determined that the Assessing Officer made the addition under section 36(1)(iii) because the appellant failed to demonstrate that the advances to sister concern were made for business purposes.

The tribunal directed the Assessing Officer to delete the penalty imposed under Section 271(1)(c).

Case Title: Galaxy Construction and Contractors Pvt. Ltd. Versus DCIT

Citation: ITA No.1402/PUN/2019

Date: 02.01.2023

Counsel For Appellant: None

Counsel For Respondent: Ramnath P. Murkunde

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