Madras High Court
Commissioner Of Income Tax vs M/S. The Cuddalore District Central on 10 July, 2025
T.C.A.Nos.434 & 435 of 2016
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 10.07.2025
CORAM :
THE HON'BLE MR.K.R.SHRIRAM, CHIEF JUSTICE
AND
THE HON'BLE MR.JUSTICE SUNDER MOHAN
T.C.A.Nos.434 & 435 of 2016
&
C.M.P.No.9110 of 2016
Commissioner of Income Tax Appellant in
Pondicherry .. both TCAs.
Vs.
M/s. The Cuddalore District Central
Co-operative Bank Ltd.
Bench Road
Cuddalore 607 001. Respondent in
PAN: AAAAT0209P .. both TCAs.
Prayer : Appeals under Section 260A of the Income Tax Act, 1961 against
the common order dated 29.05.2015 passed in ITA Nos.2805 &
2806/Mds/2014 on the file of the Income Tax Appellate Tribunal, C Bench,
Chennai.
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T.C.A.Nos.434 & 435 of 2016
For Appellant : Dr.S.Sathiyanarayanan
Senior Standing Counsel
For Respondent : Mr.Varun Ranganathan
For Mr.Ravi Kannan
JUDGMENT
(Judgment of the Court was delivered
by the Hon'ble Chief Justice)
On 21.09.2016, the Court was pleased to admit the appeals. The
following substantial question of law was framed in both the appeals:
“Whether on the facts and in the circumstances of the case
the Tribunal was right in holding that the penalty under Section
271(1)(c) cannot be levied on the assessee, even though the
assessee had claimed deductions under Section 36(1)(viia)
among others which were not applicable to co-operative banks.”
2. In our view, as submitted by Shri.Sathiyanarayanan, the issue is
squarely covered by the judgment of the Bombay High Court in Principal
Commissioner of Income Tax v. ICICI Bank Ltd.1, to which, one of us was a
Member (K.R.Shriram, CJ). It will be useful to re-produce paragraphs 3
and 4 of the said judgment, which read as under:
1 [2024] 161 taxmann.com 454 (Bom.)
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T.C.A.Nos.434 & 435 of 2016
“3. Assessee challenged the assessment order before the
Commissioner of Income Tax (Appeals) (CIT(A)) and thereafter
before the ITAT. When assessee's appeal was pending before the
ITAT, the AO issued a notice to assessee under Section 271(1)(c)
of the Act and the allegation was the additions made in the
assessment order were a result of furnishing of inaccurate
particulars of income or concealment of income by assessee.
Assessee's objections were rejected and the AO passed an order
imposing penalty of Rs.48,86,23,673/- under Section 271(1)(c) of
the Act. In the appeal filed by assessee, the CIT(A) deleted the
penalty imposed by the AO. The Department challenged that
order of CIT(A) before the ITAT and the ITAT upheld that finding
of the CIT(A).
4. It is the case of revenue that in the return of income,
assessee did not claim certain deductions, during the course of
assessment proceedings. Assessee claimed such deductions and
thereby has furnished inaccurate particulars of income. It is
department's case that only because assessee has offered income
and not claimed deductions in the return of income would not
absolve assessee from the liability of Section 271(1)(c) of the Act.
The ITAT, in our view, correctly held that provisions of Section
271(1)(c) of the Act are not attracted. The ITAT was of the view
and rightly so that assessee had made a bona fide claim under
Section 36(1)(viii) as such deductions claimed is linked to the
business profit. Only because there was variance in the
deductions allowable due to change in determination of business
profit, it cannot be said that assessee has furnished inaccurate
particulars of income or concealed inaccurate particulars of
income. As held by the Apex Court in Commissioner of Income
Tax Vs. Reliance Petro Products Pvt Ltd. [[2010] 189 Taxmann
322/322 ITR 158 (SC)] if we accept the contention of revenue,
then in case of every return where the claim sum is not accepted
by the AO for any reason, assessee will invite penalty under
Section 271(1)(c) of the Act. A mere making of the claim which is
not sustainable in law by itself, will not amount to furnishing
inaccurate particulars regarding the income of assessee, such
claim made in the return cannot amount to be inaccurate
particulars.”
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T.C.A.Nos.434 & 435 of 2016
3. In the circumstances, the question of law is answered in favour of
the assessee. Appeals are dismissed. There shall be no order as to costs.
Consequently, the interim application is also dismissed.
(K.R.SHRIRAM, CJ) (SUNDER MOHAN,J.)
10.07.2025
Index : Yes/No
Neutral Citation : Yes/No
kpl
To
1. The Assistant Registrar
Income Tax Appellate Tribunal
Chennai Benches, Chennai.
2. The Commissioner of Income Tax (Appeals) - VI
Chennai.
3. The Assistant Commissioner of Income Tax
Circle I
Pondicherry.
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T.C.A.Nos.434 & 435 of 2016
THE HON'BLE CHIEF JUSTICE
AND
SUNDER MOHAN,J.
(kpl)
T.C.A.Nos.434 & 435 of 2016
10.07.2025
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