TaxTMI 
TaxTMI 
2015 (9) TMI 955
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....ct and 80HHC of the Act was claimed. In response to query, it was contended on behalf of the assessee that deduction was claimed on the basis of the legal position available at the relevant point of time, but later on when it was realized that the view taken by the Tribunal was reversed by the Hon'ble High Court, the assessee has agreed for the addition of Rs. 2 crores with a condition that no penal action will be initiated against the assessee. Through letters dated 10.3.2006 and 14.3.2006 additional income was offered to tax and accordingly assessment was completed at an amount of Rs. 5,32,37,594/-. The Assessing Officer has initiated penalty proceedings under section 271(1)(c) of the Act and during the penalty proceedings, it was contended on behalf of the assessee that the assessee has neither concealed any income nor furnished any inaccurate particulars of income. The deductions were claimed on the basis of prevailing legal position. Being not convinced with the explanations of the assessee, the Assessing Officer has levied penalty at Rs. 1.25 crores under section 271(1)(c) of the Act. 3. The assessee preferred an appeal before the ld. CIT(A) and filed detailed explanatio....
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....he enactment of Taxation Laws Amendment Act, 2005. The assessee is totally into export business of finished leather and is eligible for deductions u/s 80IB &. 80HHC. The assessee had produced the books of account which were examined and test checked. No discrepancy or defects were pointed out in the books of account. As a matter of fact, even no defects had been pointed out in the audit reports filed by the assessee in support of the deductions claimed. There is no change in the system of accounting followed by the assessee and the AO has not rejected the books of account also. It is also undisputed that the assessee has no other source of income. The AO has not brought any material on record suggesting that the assessee enjoys or has any other source of income other than as declared by it. From the facts as enumerated above and the discussions made in the assessment order, the assessee came to be assessed on an agreed addition of Rs. 2 crores only for the purpose of being taxed on the incentives claimed by the assessee in respect of exports on w....
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....held to be violative to the provisions of law because it differentiates between the class and categories of the exporters which has been held to be not in accordance with the provisions of law. The Gujarat High Court in the case of Avani Exports vs. CIT and others 348 ITR 391 (Suj). has held as under: "On consideration of the learned materials on record, we, therefore find substance in the contention of the learned counsel for the petitioner that the impugned amendment is violative for its retrospective operation in order to overcome the decision of the Tribunal, and at the same time, for depriving the benefit earlier granted to a class of the assessee whose assessment were still pending although such benefit will be available to the assessee whose assessments have already been concluded. In other, words in this type of substantive amendment, retrospective operation can be given only if it is for the benefit of the assessee but not in a case where it effects even a fewer section of the assessee. We accordingly, quash the impugned amendment only to this extent that the operation of the said section could be given effect from the date of amendment and not in respect of the earli....
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.... Whatever agreed addition has come to be made, is only out of the incentives received by the assessee in respect of exports, which receipt of incentives is not in doubt. It is a case where the deduction u/s 80IB has been claimed for which there was all material available with the assessee which was duly disclosed, in the shape of income &. expenditure account and in the audit reports filed in support of the said claim. It is out and out, a case of legal deduction and the claim of the assessee has been denied on account of difference of opinion. Be it may, the bonafide of the assessee also cannot be doubted for the reason, that the deduction claimed u/s 80IB and 80HHC were duly supported by audit reports to which the assessee was legally entitled. None of the facts and figures in respect of the deductions have been found to be false or untrue. The explanation given by the assessee throughout during the course of assessment proceedings that the assessee is eligible for the said deduction in view of the provisions of the said section and also in view of the several decisions. It is also an admitted fact that both dec....
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....d in Dharmendra Textile Processors 306 ITR 277 (SC) was only that part in Dilip Shroff where it was held that mensrea was an essential requirement for penalty u/s 271 (1)(c). CIT vs. Manjunatho Cotton & Sinning Factory 359 ITR 565 (Kar) The High Court had to consider whether penalty u/s 271(1)(c) can be levied in a case where the assessee agrees to an addition made by the AO so as to buy peace of mind. Merely because the assessee agreed for addition does not lead to the inference that said addition is on account of concealment if the assessee has offered an explanation which is not found to be false. The mere fact that the assessee agreed to pay tax and did not challenge the assessment order does not mean that his conduct is mala fide. The High Court dismissing the appeal filed by the department held (i) that merely because the assessee agreed to the addition and the assessment order was passed on the basis of this addition, when the assessee had paid the tax and the interest thereon in the absence of any material on record to show the concealment of income, it could be inferred that the addition was on account....
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....e burden is on the assessee to show otherwise, by cogent and reliable evidence. When the initial onus placed by the Explanation has been discharged by the assessee, the onus shifts on the Revenue to show that the amount in question constituted undisclosed income. On facts, the onus cast upon the assessee has been discharged by giving a cogent and reliable explanation. If the department did not agree with the explanation, the onus was on the department to prove that there was concealment of particulars of income or furnishing inaccurate particulars of income. Such onus has not been discharged by the department and so the Tribunal's finding cannot be interfered with (Dharmendra Textile's Processors 306 ITR 277 (SC) A Reliance Petroproducts 322 ITR 158 (SC) referred)" I have also gone through the copies of the order sheet entries and find that the AO himself has mentioned that penalty proceedings would be considered liberally. This shows that the AO was not serious neither in initiating nor levying the penalty. The order sheet entries also do not suggest that the AO came across any such incriminating material....
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....the Tribunal in the case of Income Tax Officer vs. Rakesh Kumar Gupta in I. T. A. No. 2690/Delhi/2009, in which relying upon the said proposition that penalty under such circumstances cannot be levied, the Tribunal has deleted the penalty. It was further contended that the assessee has filed the return on 1.12.2003 before the judgment of the Hon'ble jurisdictional High Court in the case of CIT vs. Ritesh Industries Ltd. (supra) which was pronounced on 23.9.2004 and that too before the enactment of the Tax Laws Amendment Act, 2005. It was further contended that at the relevant point of time, the order of the Tribunal in the case of ACIT vs. Vipin Sardanan (supra) was available, in which deduction under section 80IB of the Act was allowable on the amount of duty drawback, as it is directly linked with the business activity of the industrial undertaking. Therefore, there was a conflict of opinions with respect to the allowable deduction under section 80IB and 80HHC of the Act on the export incentives. The position was clarified subsequently by the judgment of the Hon'ble Apex Court in the case of Liberty India vs. CIT (supra). It was further contended that now deductions under....