Whether CIT can levy penalty u/s.271(1)(c) of the Act

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

26 January 2011 Whether the CIT can levy penalty u/s.271(1)(c) of the Act during the course of revisionary proceedings? Whether such action is valid? What is the impact of Reliance Petro Products in this regard?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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27 January 2011 The CIT can levy penalty w.e.f 1-6-2002 by virtue of an insertion made by the Finance Act,2002.
The case of CIT V Reliance Petro Products (2010) TPI 23 (SC) is :-
The assessee claimed deduction u/s 36 (1) (iii) for interest paid on loan taken for purchase of shares. The AO disallowed the interest u/s 14A and levied penalty u/s 271 (1) (c) on the ground that the claim was unsustainable. The penalty was deleted by the appellate authorities. On appeal by the department to the Supreme Court, HELD dismissing the appeal:-
"a mere making of the claim,which is not sustainable in law,will not amount to furnishing of inaccurate particulars regarding the income of the assessee".
Impact of the above decision will, as you know, depends on the facts of your case.

Guest

Guest (Expert)

27 January 2011 CIT has been empowered for levying penalty u/s 271(1)(c)since 01.06.2002

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