C. I. T., AHMEDABAD versus RELIANCE PETROPRODUCTS PVT. LTD.

Citation: [2010] 3 S.C.R. 510 · Decided: 17-03-2010 · Supreme Court of India · Bench: V.S. SIRPURKAR · Disposal: Dismissed

Judgment (excerpt)

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[2010] 3 S.C.R. 510 
C.l·.T., AHMEDABAD 
v. 
RELIANCE PETROPRODUC~S PVT. LTD. 
(Civil Appeal No. 2463 of 2010) 
MARCH 17, 2010 
[V.S. SIRPURKAR ANO DR. MUKUNDAKAM 
SHARMA, JJ.] 
INCOME TAX ACT, 1961: 
s. 271 (1 )(c) - Penalty on concealment of income or 
furnishing 'inaccurate particulars' - Assessee claiming in the 
return a certain sum as expenditure, on :the basis of 
expenditure made for paying the interest on the loan for 
0 purchase of IPL shares - Claim not accepted - Show cause 
notice u/s 271(1)(c) issued to assessee....:. HELD: There is no 
finding that any details supplied by assessee were found to 
be incorrect or erroneous or false - A mere making of the 
claim, which is not sustainable in law, by itself will not amount 
E ·to furnishing inaccurate particulars - Penalty uls 271(1)(c), is, 
therefore, not attracted. 
WORDS\AND PHRASES: 
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Expression 'inaccurate particulars' as occurring in · 
F s.271(1)(c) of Income Tax Act, 1961 "'."" Connotation of. 
The assessee, ·an investment company, in its return . 
showed Rs.28,77,242 as expenditure which it claimed on 
the basis of the expenditure made for paying the interest 
on· the loans obtained by it by which amount the 
G assessee purchased some IPL shares. The assesee 
declared a loss of Rs.26,54,554/-. The claim of the 
assessee was not accepted. Penalty proceedings u/s 
·211(1)(c) of the Act were initiated against the assessee. 
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510 
C.l.T., AHMEDABAD v. RELIANCE 
511 
PETROPRODUCTS PVT. LTD. 
The assessee in its reply to the show cause notice stated 
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that all the details given in the return were correct, there 
was no concealment of income nor were any inaccurate 
particulars of such income furnished. The Commissioner 
(Appeals) deleted the penalty and his order was upheld 
by the Income Tax Appellate Tribunal as also the High . B 
Court. 
In the instant appeal filed by the Revenue, th~ .: · : .. 
question for consideration before the Court was: whether· · 
the. assessee was liab.le to pay the penalty u/s 271 (1 )(c). C 
of the Income Tax Act, 1961? . 
Dismissing the appeal, the Court . 
. HELD: 1.1. In order to attract the provisions of s.271 
of .the .Income Tax Act, 1961, firstly, there has to· be p 
concealment of the particulars of. the income of the 
assessee. Secondly, the assessee must have furnished 
· inaccurate particulars of his income.Before the penalty· 
u/s 271(1)(c) of the Act is imposed, it must be shown that 
the conditions under the said section exist. There .can be E. 
no dispute that everything would depend upon the return 
filed because that is the only document, where the 
assessee can furnish the particulars of his income. When 
such particulars are found to· be inaccurate, the liability'· 
would arise. The instant case is not the one of 
concealment of the income. That is not the case of the 
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Revenue either. The stand of the Revenue is that by · · 
making incorrect claim for the expenditure on interest, · 
the assessee tias furnished inaccurate particulars of the· . 
income. {Para 7 ar:id 8) [516-G-H; 517-A-C; 518-A-B] 
Dilip N. Shroff vs. Joint Commissioner of Income Tax, 
Mumbai & Anr. 2007 (7) SCR 499 =2007{6) SCC 329, 
explained. 
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1.2. Reading the words 'inaccurate' and 'particulars' 
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512 
SUPREME COURT REPORTS 
[2010] 3 S.C.R. 
A in conjunction, they must mean the details supplied in the 
return, which are not accurate, not exact or correct, not 
according to truth or are erroneous. In the instant case, 
there is no finding that any details supplied by the 
assessee in its return were found to be incorrect or 
B erroneous or false. Therefore, there would be no 
question of inviting the penalty uls 271(1)(c) of the Act. 
A mere making of the claim, which is not sustainable in 
law, by itself, will not amount to furnishing inaccurate 
particulars regarding the income of the assessee. Such 
c claim made in the return cannot amount to the inaccurate 
particulars. [Para 9] [520-A-C] 
1.3. It cannot be said that "submitting an incorrect 
claim in law for the expenditure on interest would amount 
to giving inaccurate particulars of such income". The 
D words are plain and simple. In order to expose the 
assessee to the penalty. unless the case is strictly 
covered by the provision, the penalty provision cannot 
be ir1voked. By any stretch of imagination, making an 
incorrect claim in law cannot tantamount to furnishing 
E inaccurate particulars. [Para 7] [517-C-D] 
Commissioner·of Income Tax, Delhi vs

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