Section 271(1)(c) of the Income-tax Act, 1961—Penalty— Mere making of a wrong claim will not led to assessee to penalty proceedings under section 271(1)(c)

Facts: Whether Tribunal is correct in deleting the penalty levied u/s 271(I)(c) without considering that "Mens rea" is apparent in this case? and Whether Tribunal is correct in deleting the Penalty relying on the earlier decision [2010] of the Supreme Court in the case of Reliance Petro Products v. CIT when latter [2013] judgement of the Supreme Court in the case of MAK Data P. Ltd. v. CIT had clearly held that "Voluntary disclosure does not release assessee from mischief of penal proceedings under section 271(1)(c)"?

Held, that the it is true that the assessee made a claim under section 10B for two of his assessment years, namely AY 2010-11 and AY 2011-12 wrongly, to which it was not entitled. But, the fact is undisputed that the Assessee has not really gone away with this exemption claim finally, upon the assessment. He has withdrawn his claim for the previous assessment year 2010-11 even by invoking the rectification jurisdiction under section 154 and for the present assessment year 2011-12 also, he has withdrawn his claim before the assessing authority itself. Therefore, the only mistake, which is rather inadvertent on the part of assessee is to make a claim under section 10B but he has finally withdrawn the same. The fact remains that there has been no revenue loss or loss of tax to the department in the present case, thus, penalty deleted. We are of the considered opinion that imposition of penalty and realisation thereof is not a regular source of income for the Income-tax Department. It is only the justifiably imposition of tax which is intended to be recovered and unless there is a mens rea or a guilty animus on the part of the assessee, the penalty under section 271(1)(c) is an exception rather than a rule. - PR. CIT V/s CORE CARBONS (P.) LTD. - [2020] 27 ITCD Online 044 (MAD)