Law:

Section:

Section 271(1)(c), read with section 80P, of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1995-96 - Assessee, a co-operative society, claimed exemption under section 80P in respect of income earned from activity of manufacturing of sugar, molasses and other by-products of sugarcane - Assessing Officer disallowed exemption on ground that assessee was engaged in manufacturing activity and not in marketing business and imposed penalty upon assessee under section 271(1)(c) for furnishing inaccurate particulars of income - Whether since at relevant time there were several decisions to support view that marketing includes processing to make produce marketable and, moreover, assessee had paid advance tax as well as self-assessment tax without taking into account deduction under section 80P, claim of deduction made by assessee was a bona fide claim - Held, yes - Whether, therefore, no penalty under section 271(1)(c) was leviable upon assessee - Held, yes FACTS The assessee, a co-operative society, filed its return declaring nil income on the ground that the business income earned from the activity of manufacturing of sugar, molasses and other by-products of sugarcane was exempt under section 80P. The Assessing Officer disallowed deduction claimed under section 80P and, thereafter, imposed penalty under section 271(1)(c) for furnishing inaccurate particulars of income. On appeal, the Commissioner (Appeals) confirmed the penalty levied. However, the Tribunal cancelled the penalty levied under section 271(1)(c) by holding that there was no attempt on the part of the assessee to defraud the revenue or to conceal the facts; that the assessee had paid the tax in advance as also self-assessment tax; that the claim made by the assessee was a bona fide claim; and that the all particulars relating to computation of income were disclosed. On appeal : HELD The issue, in the instant case, was as to whether the assessee was guilty of having concealed any particulars of its income or having furnished inaccurate particulars of income. The assessee had made a claim for exemption under section 80P(2)(a)(iii ). As per the said provisions, any society…

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