TaxTMI 
TaxTMI 
2013 (9) TMI 1105
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....of Hon'ble High Court in Abhishek Industries Ltd., despite the fact that the claim of the assessee that sale tax subsidy was capital receipt was not accepted by the CIT (Appeal) and Hon'ble ITAT in appeal by the assessee against quantum addition." 3. The ground of appeal raised by the Revenue in ITA No.71/Chd/2012 reads as under: "1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was right in deleting the penalty of Rs. 8,80,74,063/- levied u/s 271 (1) (c) by the AO on the addition of Rs. 26,16,57,943/- made on account of sale tax subsidy by treating it as revenue receipt as against capital receipt declared by the assessee in view of the judgment of Hon'ble High Court in Abhishek Industries Ltd., despite the fact that the claim of the assessee that sale tax subsidy was capital receipt was not accepted by the CIT (Appeal) and Hon'ble ITAT in appeal by the assessee against quantum addition." 4. Both these appeals relating to the same assessee against levy of penalty u/s 271 (1) (c) of the Act were heard together and are being disposed off by this consolidated order for the sake of convenience. 5. The issue arising the prese....
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....initiated. The addition made by the Assessing Officer was confirmed by the CIT (Appeals) and thereafter show cause notice was issued to the assessee and penalty u/s 271(1)(c) of the Act was levied at Rs. 7.40 crores. 8. The CIT (Appeals) after considering the reply of the assessee, which is incorporated under para 4.1 at pages 2 to 9 of the appellate order observed that when the assessee has concealed particulars of his income or furnished inaccurate particulars, conditions laid down in explanation (1) (supra) have to be examined. The CIT (Appeals) after considering the issue of levy of penalty on the addition of Rs. 20,22,09,664/- on account of sales tax subsidy observed as under: "The Assessing Officer has levied the penalty on the addition of Rs. 20,22,09,664/- on account of sales tax subsidy by treating it as revenue receipt as against capital receipt declared by the appellant. The issue has been decided in favour of revenue by Hon'ble Punjab and Haryana High Court in the case of M/s Abhishek Industries Ltd. (286 ITR 1) but SLP against the order of High Court stands admitted by the Hon'ble Supreme Court. The Ld. Counsel has argued that once Their Lordships o....
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....t the same reflects that the issue is debatable and on addition made on the basis of such debatable issue, there was no merit in levying of penalty u/s 271(1)(c) of the Act. It was further pointed out by the learned A.R. for the assessee that the quantum appeals against the addition confirmed by the Tribunal in the case of the assessee were pending before the Punjab & Haryana High Court. The learned A.R. for the assessee further contended that the dispute arising in the present appeal whether the incentive received by the assessee under the West Bengal Incentive Scheme was capital or revenue in nature. It was pointed out that similar issue arose before the Calcutta High Court in CIT Vs. Rasoi Ltd. [335 ITR 438 (Cal)] and it has been held that the grant of subsidy in the case was of capital nature. It was further pointed out by the learned A.R. for the assessee that in CIT Vs. Ponni Sugars & Chemicals Ltd. [306 ITR 392 (SC)], the Hon'ble Supreme Court have held that the subsidy received by the assessee was capital in nature. Similar view has been in Siya Ram Garg 49 DTR (P&H) 126. Further the learned A.R. for the assessee placed reliance on the decision by the Hon'ble ....
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....ction 271 (1)(c), the onus is upon the assessee to establish the bonafides of his claim and where the assessee discharges its onus of proving his claim to be bonafidely made, the Courts have held that there is no merit in levy of penalty u/s 271(1)(c) of the Act. . 12. The Hon'ble Supreme Court of India in CIT, Ahemdabad Vs. Reliance Petroproducts Pvt. Ltd (supra) while referring in the word particulars in "inaccurate particulars of income", observed, "as per Law Lexicon, the meaning of word 'particular' is a detail or details, the details of a claim, or the separate items of an account. Therefore, the word "particulars" used in Section 271 (1)(c) would embrace the meaning of the details of the claim made." It was further held as under:- "We have already seen the meaning of the word "particulars" in the earlier part of this judgment. Reading the words in conjunction, they must mean the details supplied in the Return, which are not accurate, not exact or correct, not according to truth or erroneous. We must hasten to add here that in the case, there is no finding that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false.....
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....at qualitative difference between criminal liability under section 276C and penalty under s. 271(1)(c) had to be kept in mind and approach adopted to the trial of a criminal case need not be adopted while considering the levy of penalty. Even so, concept of penalty has not undergone change by virtue of the said judgment. Penalty is imposed only when there is some element of deliberate default and not a mere mistake. This being the position, the finding having been recorded on facts that the furnishing of inaccurate particulars was simply a mistake and not a deliberate attempt to evade tax, the view taken by the Tribunal cannot be held to be perverse." 17. The issue arising in the present appeal is relating to levy of penalty u/s 271 (1) (c) of the Act in respect of addition on account of assessability of sales tax subsidy of Rs. 20,22,09,664/- received by the assessee during the year under consideration. The assessee had treated the said subsidy as capital receipts in its return of income but the same was assessed as revenue receipts in the hands of the assessee following the decision of the Hon'ble Punjab & Haryana High Court in CIT Vs. Abhishek Industries Ltd. (supra). The....
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....ot tenable, as in the aforesaid case, the deductions under section 80-O of the Act was declined for the reason that the assessee has not produced any details of the expenses allegedly incurred by it. The Delhi High Court observed (page 170): "The assessee, for claiming deduction under section 80-O of the Act, wanted the same at 50 per cent of the gross income received in convertible foreign exchange in India provided by it to its foreign clients. The Assessing Officer, however, was of the view that on correct interpretation under section 80-O, deduction is restricted to the net income and, therefore, expenditure incurred in India for earning the foreign exchange had to be deducted. The Assessing Officer, therefore, wanted the assessee to furnish the details of expenses. As the assessee failed to do the needful in respect of various particulars demanded, the Assessing Officer was left with no alternative but to estimate such expenditure in the ratio of proportion of foreign income to the total income." 4. In the present case, there is no dispute about the quantum of receipt of grant-in-aid from the State Government. The assessee reflected the same as capital receip....