Section 271(1)(c) of Income Tax Act, 1961—Penalty u/s 271(1)(c)— In the instant case, revenue challenges the order passed by ITAT wherein ITAT set aside the order passed by CIT(A) and directed the AO to delete the penalty imposed u/s 271(1)(c) of the act.

Held that— The Assessing Officer in the Assessment Year 2006-07 for the first time disputed the above method of claiming expenses. The Assessing Officer adopted a methodology to postpone allowability of claim for deduction of expenses in the year in which the income is offered to tax. The question, therefore, is whether making such a claim on the basis of accepted practice would amount to furnishing inaccurate particulars of income within the meaning of Section 271(1)(c) of the Act. In the case of Commissioner of Income Tax Vs. Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158, the Supreme Court observes that a mere making of claim, which is not sustainable in law, by itself, will not amount to furnish inaccurate particulars regarding the income. Therefore, mere making of a claim which is disallowed in quantum proceedings, cannot by itself be a ground to impose penalty under Section 271(1)(c) of the Act.[COMMISSIONER OF INCOME TAX VERSUS M/S. LOKHANDWALA CONSTRUCTION INDUSTRIES PVT. LTD.] [2019] 17 ITCD Online (51) [BOMBAY HIGH COURT]