This appeal by Gulab Impex Enterprises Pvt. Ltd. against the order dated 08.09.2022 passed by the National Faceless Appeal Centre (NFAC) pertains to a penalty of Rs.1,70,000/- imposed under Section 271(1)(c) of the Income-tax Act, 1961, for the assessment year 2015-16.
The case involves a penalty imposed for the alleged inaccuracy in the particulars of income related to a Rs.5,00,000/- penalty paid to SEBI, which the assessee initially did not claim as a deduction but subsequently claimed in a revised return. The Assessing Officer disallowed the deduction citing the non-deductibility of penalties under Section 37(1) of the Act, leading to the contested penalty imposition.
The Tribunal reviewed the submissions and the materials on record. It was noted that the assessee had disclosed all pertinent details regarding the SEBI payment in both the audit report and its original tax return. The Tribunal found that claiming the deduction in a revised return does not constitute the furnishing of inaccurate particulars of income. Furthermore, the Tribunal considered whether the payment to SEBI constituted a violation of law, which is a debatable issue with judicial precedents suggesting that such payments do not necessarily imply legal infractions.
The Tribunal decided that the penalty for inaccurate particulars of income was unjustified, leading to the deletion of the penalty. This outcome highlights the importance of the nature of the expense and the interpretation of regulatory payments under tax law, providing significant precedents for similar cases.
Gulab Impex Enterprises Pvt. Ltd. vs. ACIT, Circle-10(2), New Delhi – ITA 2538/DEL/2022
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