Wrong deduction claimed which resulted in reduction of Tax liability can't amount to concealment of income

In Pr. Commissioner of Income Tax v. Sonu Realtors Private Limited [INCOME TAX APPEAL NO.956 OF 2017 dated October 11, 2021], Pr. Commissioner of Income Tax ("the Appellant") filed the appeal being aggrieved against Order dated July 20, 2016 passed by Income Tax Appellate Tribunal ("ITAT") in which the order of Appellant was set aside wherein it was alleged by the Appellant that Sonu Realtors Private Limited ("the Respondent") had made an attempt to reduce its tax liability by claiming wrong deduction and the Respondent committed a default of not computing the book profit under Section 115JB of the Income Tax Act, 1961("the IT Act").

Factually, the Respondent is a company engaged in the business of construction. For the Assessment Year 2008-2009, the Respondent filed its return of income at Rs.51,34,740/- after claiming deduction under Sub-Section 10 of 80 IB (Deduction in respect of profits and gains from certain industrial undertakings other than infrastructure development undertakings) of the IT Act amounting to Rs.13,72,33,540/-. Subsequently, the Commissioner of Income Tax (CIT) passed an order under Section 263 of the IT Act holding that Respondent was taxable under the provisions of Section 115JB (Special provision for payment of tax by certain companies) of the IT Act. The Respondent had agreed for the revisions of the assessment pursuant to revision order under Section 263 following which the Assessing Officer ("AO") passed order under Section 143 (Assessment) of the IT Act assessing the income of the Respondent under Section 115JB of the IT Act. The Respondent also paid tax under Section 115JB.

The AO however later levied penalty under Section 271 (1) (c) of the IT Act on the ground that the Respondent had made an attempt to reduce its tax liability by claiming wrong deduction and committed a default of not computing the book profit under Section 115JB as required mandatorily by the provisions of the IT Act. The Appellant has assailed imposition of penalty by the AO on the ground that the Respondent committed a default of not computing the book profit under Section 115JB of the IT Act.

The Hon'ble Bombay High Court held that in any event even assuming for a moment that such particulars were not furnished but only the return of income was filed showing the income tax payable on the total income as computed under the IT Act Act that cannot amount to concealment of particulars of income or furnish inaccurate particulars of income. Even the attempt if any as alleged to reduce tax liability by claiming wrong deduction cannot amount to concealing the particulars of income or furnishing inaccurate particulars of such income.

Further, the Court added that the Tribunal has not committed any perversity or applied incorrect principles to the given facts. And the appeal is devoid of merits and is dismissed with no order as to costs.