TaxTMI 
TaxTMI 
2013 (10) TMI 1068
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....t of Rs.6,38,69,857/- but determining taxes payable u/s 115JB of the Act on the basis of book profit of Rs.9,50,88,243/-. Subsequently reassessment proceedings u/s 147 of the Act were initiated on 16.10.2008 on the ground that while allowing deduction u/s 80IB of the Act the following receipts were not excluded : DEPB & DFRC Credit Rs.193,79,010/- Interest on Fixed Deposit Rs. 39,88,487/- Rs.233,67,497/- The assessment proceedings were concluded u/s 144/147 of the Act on 31.12.2009 by reducing the claim u/s 80IB of the Act by Rs.2,33,67,497/-. However, the assessee was assessed to pay tax on the basis of the same book profit u/s 115JB of the Act as assessed earlier. Thereafter penalty proceedings u/s 271(1)(c) of the Act was initiated and penalty of Rs.85,50,781/- being 100% of the tax sought to be evade was imposed on the assessee u/s 271(1)(c) of the Act on the ground of furnishing inaccurate particulars of income. 4. On appeal the ld. CIT(A) deleted the penalty by observing as under :- "All the above grounds refer to the same issue under dispute i.e. imposition of penalty for concealment of income u/s 271(1)(c) at Rs.85,50,751/- calculated @10% ....
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....arding concealment must fail. 7. It is true that penalty u/s 271(1)(c) is also contemplated where the assessee furnishes inaccurate particulars of income. Section 80IB authorizes deduction in respect of profit and gains from certain industrial undertakings specified in Sub-section (3) to (10). The company's factory unit falls within industrially backward areas as prescribed by Govt. of India, which is covered under Sub-section (5) Section 80IB authorizes deduction of any profits and gains derived form industrial undertaking carried on in background districts. The said section does not specify the manner in which profits and gain has to be computed. Hence it cannot be argued that the assessee having claimed deduction u/s 80IB for entire profits and gains of such industrial undertaking has furnished inaccurate particulars. The company was forced to make Fixed Deposit as margin money and as such interest on such F.D. requires to be considered as part of its eligible business. Likewise, export incentives were received against export of goods produced in the said unit established in the industrially backward district. 8. The initiation of penalty proceeding in course of assessment....
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....ferring to following decisions : (a) CIT -vs- Escorts FinanceLtd. [2009] 183 Taxman 453 (Del) (b) ITO -vs- Mool Chand Gupta 110 ITD 89 (Del ITAT) (c) ITO vs Geep Industrial Syndicate Ltd. 23 ITD 448 (Allah Tribunal) 13. It is submitted that the decision in Escorts Finance Ltd. Supra is not applicable as the facts are distinguishable. In that case it was found on examination that the company being a financial company was ex-facie is not entitled to deduction u/s 35D in respect of public issue expenses. The claim u/s 35D was held as bogus. In the present case, there is no dispute that the company is entitled to deduction u/s 80IB(5) since its industrial undertaking is situated in industrially backward area. The controversy in the present case is the quantum of profit which is allowable u/s 80IB(5) ie.. whether the entire profit or the profit after excluding Export incentive etc. it will not be out of place to reproduce the operative part of the judgment which remains as follows :- It has been repeatedly held by the courts that penalty on the ground of concealment of particulars or non-disclosure of full particulars can be levied only when in the accounts/returns an ite....
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....rs of income and the difference between assessed income and income as returned by the assessee would represent the concealment. The assessee did not show any proper cause not furnished any evidence in support of its case that it had not deliberately concealed its income or had not furnished inaccurate particulars of its income. In the absence of any such reasonable cause the assessee clearly comes within the mischief of the explanation to section 271(1)(c) as a defaulter unable to prove that the failure to return the correct income did not arise from any fraud or gross or willful neglect on its part." The appellant argued that the A.O. is unjustified in alleging concealment of income or furnishing inaccurate particulars of income for the reason that the company's claim for deduction relating to export incentive was not allowed in view of recent Apex Court decision dated 31/08/09 in the case of Liberty India, while the return was filed as back as in the year 2005 and assessment was completed on 26.12.2007. Even in the assessee's own case, the deduction was allowed by CIT(A) for A.Y. 2004-05 on the same issue. It has further stated that tax sought to be evaded considered by A.O....
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....e total income of the appellant. Even in the order u/s 144/147 in which penalty proceeding was initiated, tax is payable u/s 115JB at the same amount as returned by the company and assessed earlier. In view of the foregoing discussion and the recent judgment of the Apex Court in the case of CIT, Ahmedabad vs Reliance Petroproducts Pvt. Ltd. dated 17.03.2010, the penalty levied by the AO is hereby cancelled." 5. The ld. DR relied on the order of the AO whereas the ld. AR of the assessee supported the order of the ld. CIT(A). 6. We have considered the rival submissions and perused the materials available on record. The undisputed facts of the case are that during the year under consideration the assessee claimed deduction u/s 80IB of the Act of DEPB & DFRC Credit of Rs.193,79,010/ and interest on Fixed Deposit of Rs.39,88,487/- which comes to total of Rs.233,67,497/-. The AO in the assessment made u/s 144/147 of the Act on 31.2.2009 reduced the claim u/s 80IB of the Act by Rs.233,67,497/- and thereafter levied penalty u/s 271(1)(c) of the Act on the assessee for furnishing of inaccurate particulars of income being 100% of the tax sought to be evaded amounting to Rs.85,50,751/- ....