No concealment penalty if claim of section 11 exemption was rejected by AO; SC dismissed SLP

 

IT : Where AO having rejected assessee claim for exemption under sections 11 and 12, passed a penalty order under section 271(1)(c) for raising a false claim, in view of fact that assessee succeeded in quantum appeal and, thus, High Court set aside penalty order as well, SLP filed against said decision was to be dismissed

Section 271(1)(c), read with section 11, of the Income-tax Act, 1961 – Penalty – For concealment of income (Disallowance of claim, effect of) – Assessee’s case was that it was a statutory body carrying on plant development of areas defined and designated by Government of Gujarat – It was registered trust under section 12AA – Assessee claimed exemptions under sections 11 and 12 – Assessing Officer rejected assessee’s claim – He also passed penalty order under section 271(1)(c) for raising a false claim – Commissioner (Appeals) deleted penalty on ground that assessee had succeeded before High Court in quantum additions – Tribunal confirmed order of Commissioner (Appeals) – High Court opined that it was not a case where a totally unsustainable and fictitious claim was put forth – According to High Court, it was a case where a statutory body had been contending that looking to its creation, constitution and kind of activities carried on, exemption under Act was available and said claim was accepted by High Court in a detailed reasoned judgment – Thus, High Court concluded that no case of penalty was made out – Whether, on facts, SLP filed against order of High Court was to be dismissed – Held, yes

 

Ahmedabad Urban Development Authority