TaxTMI 
TaxTMI 
2015 (6) TMI 853
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....:- "1. Whether on the facts and in the circumstances of the case, the ld. CIT(A) has erred in deleting the penalty of Rs. 41,49,854/- imposed u/s 271(1)( c) of the I.T. Act, 1961 for furnishing of inaccurate particulars of income." 2. Briefly stated, the facts giving rise to this appeal are that the assessee while filing the return of income claimed deduction u/s 80IB of the Income Tax Act, 1961 amounting to Rs. 1,22,09,044/- . Subsequently, during the assessment proceedings, assessee filed a letter on 8.9.2010 and withdrew the claim of deduction. During the assessment proceedings, the issue was discussed and the assessee's representative submitted that their claim was valid but they were not in possession of excise certificate indica....
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....ppellate authority has erred in deleting the penalty by holding that the AO had not recorded its satisfaction regarding furnishing of inaccurate particulars of income whereas the AO initiated the penalty proceedings u/s 271(1)(c) of the Act in the assessment order and the assessee accepted that he had furnished inaccurate particulars of income u/s 80IB of the Act and agreed for addition of the same. Ld. DR vehemently contended that the CIT(A) ignored the reason recorded by the AO for imposing penalty that the CIT(A) was aware of the fact that commencement of business certificate of Excise department was not available with it, still it did not file its revised return as per time allowed u/s 139(5) of the Act. The DR also mentioned that the C....
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....n this situation, the assessee cannot be held guilty of filing inaccurate particulars of income. 7. On careful consideration of above submissions and contentions of both the sides and bare reading of the impugned order, we observe that the CIT(A) has allowed the appeal of the assessee deleting the penalty imposed by the AO u/s 271(1)(c) of the Act with following observations and conclusions:- "5.6 In fact, before the questionnaires were issued u/s 142(1) by the AO, the assessee offered the income to the extent it was claimed as deduction u/s 80IB to be considered as part of income. The assessee surrendered the same to buy peace with the department before the claim of deduction u/s 80IB was examined by the AO in the assessment proceedi....
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....ccurred while making the statement of income and it also held no satisfaction was recorded by the A.O in the assessment proceeding that the assessee was guilty of filing inaccurate particulars of income. It was therefore held that the penalty cannot be imposed on the assessee u/s 271 (1 ) (c) of the Act. 5.8 In the case of Dy. CIT vs. Tarun Agarwal 2009 (13) MTC 831, the ITAT Lucknow Bench 'A' held that "the assessee had surrendered the amount before any specific detection of undisclosed income or even before the issue of notice. Even though a general enquiry was going on and notices had been issued to some of his relatives and the amount might have been surrendered because of compulsion of circumstances, it was not sufficient to....
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.... and computation. The AO did not bring any material on record that the declaration of income made by the assessee in his revised return or his explanation was not bonafide. In these circumstances, there appears to be no basis for imposition of penalty on the ground that the assessee furnished inaccurate particulars of income." 5.10 In view of the above facts and decisions cited, it is held that as no satisfaction is recorded for initiation of penalty proceedings u/s 271(1)(c) of the IT Act, 1961 in respect of additions made for disallowance u/s 80IB of the Act., therefore, the penalty order suffers from lack of jurisdiction to impose penalty. Further as the assessee himself offered the income and rectified the bonafide mistake before its....
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....of penalty proceedings u/s 271(1)(c) of the Act was not valid. We may also point out that in the original assessment order, the AO recorded satisfaction about three additions at the end of relevant operative para but neither at the end of impugned addition in regard to agreed disallowance nor at the end of the assessment order, the AO bothered to record required satisfaction as per provisions of the Act for initiation of penalty proceedings u/s 271(1)( c) of the Act. 9. However, in the totality of the facts and circumstances of the case, we clearly note that the assessee has withdrawn its claim of deduction filed u/s 80IB of the Act at the very outset of assessment proceedings prior to issuance of notice u/s 142(1) of the Act and the rea....