TaxTMI 
TaxTMI 
2016 (6) TMI 934
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.... (Appeals) erred on facts and in law in not holding that the penalty order under section 271(1 )(c) was beyond jurisdiction, bad in law and void ab-initio, in as much as the same was initiated on issues for which no prima facie satisfaction, qua concealment/furnishing of inaccurate particulars of income, was discernible from the assessment order passed under section 143(3) of the Act. Without Prejudice 2. That the Commissioner of Income Tax (Appeals) erred on facts and in law in upholding the action of the assessing officer in imposing penalty under section 271(1 )(c) of the Act in respect of excess deduction of Rs. 5,77,22,220/- claimed under section 80IB of the Act, which was suo-moto disallowed and offered to tax by the appellant in the course of assessment proceedings. 2.1 That the Commissioner of Income Tax (Appeals) erred on facts and in law in not appreciating that the excess claim of deduction under section 80IB of the Act to the extent of Rs. 5,77,22,220/-, which was based on the certificate granted by the auditors, was made due to inadvertence and was a bonafide mistake, not warranting imposition of penalty under section 271(1 )(c) of the Act. 2.2 That the Com....
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....oor, which was treated as unexplained cash credit under section 68 of the Act in the preceding assessment year. The appellant craves leave to add to, alter, amend or vary from the above grounds of appeal before or at the time of hearing. 2. The facts in brief are that the assessee was engaged in manufacturing and sale of PU foam, PU foam products, acquirer mattresses etc. and having manufacturing units located in various places in the country. In the return of income filed the assessee claimed deduction of Rs. 10,32,97,807/- under section 80-IB of the Income-tax Act, 1961 (for short "the Act") at the rate of hundred percent in respect of three units namely Unit-V (Ralholi-Silvasa), Unit-X (Saily- Silvasa), Unit-IX (Pondicherry) and 30% deduction in respect of Unit-IV (Saily- Silvasa). Subsequently, in the course of scrutiny proceedings through letter dated 01/12/2006, the assessee revised its claim of deduction under section 80- IB of the Act to Rs. 5,77,22,220/- stating that deduction in respect of unit-X and unit-IX was claimed wrongly at the rate of 100% as against the 30% allowable, accordingly in the order under Section 143(3) of the Act, the Assessing Officer allowed th....
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....rieved with the findings of the learned Commissioner of Income Tax(Appeals), the assessee is in appeal before the Tribunal. 3. The grounds no. 1 and 1.1 are not pressed by the learned Authorized Representative of the assessee and, therefore, we dismiss the same as infructuous. 4. In grounds no. 2 to 2.5, the assessee has challenged levy of penalty under section 271(1)(c) of the Act in respect of excess deduction claimed of Rs. 5,77,22,220/- under section 80-IB of the Act. The facts in respect of the issue in dispute are that the Assessing Officer levied the penalty on the ground that the assessee failed to substantiate its explanation regarding addition/disallowances made in the assessment. The learned Commissioner of Income-tax (Appeals) in the impugned order has repeated the finding of the earlier Commissioner of Income-tax (Appeals) on the issue in dispute. According to the Commissioner of Income-tax (Appeals) the correct amount of addition on this account would have been Rs. 5,84,17,392/-, which was not objected by the Authorized Representative of the assessee. The learned Commissioner of Income-tax (Appeals) held that mere filing of letter before the Assessing Officer re....
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....judgment of the Hon'ble Delhi High Court in the case of CIT Vs. Arvind Nagpal in ITA No. 481/2013. The learned Authorized Representative also relied on the judgment of the Hon'ble Supreme Court in the case of CIT versus reliance Petroproducts Private Limited 322 ITR 158. The learned AR, relying on the decision of the Delhi High Court in the case of CIT Vs. S.A.S. Pharmaceutical, (2011) 355 ITR 259, submitted that no penalty on suo motu disallowance of inadvertent/wrong claim be levied. 4.2 On the contrary, learned Sr. Departmental Representative relying on the orders of the authorities below submitted that notice under section 143(2) was issued to the assessee for scrutiny of the case and then only the assessee realized mistake and no revise return was filed by the assessee rectifying its mistake. 4.3 We have heard the rival submission and perused the material on record. We find that there is no dispute on the issue that the claim of 100% deduction under section 80-IB in respect of the two units was wrong but the dispute is whether the mistake was bonafide and whether it was detected suo motu by the assessee and rectified before being noticed by the Assessing Officer. We find....
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...., that the imposition of penalty on the assessee is not justified. We are satisfied that the assessee had committed an inadvertent and bona fide error and had not intended to or attempted to either conceal its income or furnish inaccurate particulars." 4.4 Following the ratio in the case of Price Waterhouse Coopers Private Limited (supra) the Hon'ble Delhi High Court in the case of CIT Vs. Arvind Nagpal (supra) also held as under: "Tribunal has recorded a finding of fact accepting the explanation given by the assessee that it was a case of mistake. He noticed that there was no dispute about figures and the transaction in question. The first transaction and full gain was disclosed by the respondent-assssee as short-term capital gains. The assessee had paid tax @ 10% which was applicable to short-terms capital gains. The Assessing Officer had observed that tax at normal rate of 30% was applicable. The assessee accepted the said position and has paid and interest. In Price Waterhouse Coopers Pvt. Ltd. Vs. Commissioner of Income Tax, (2012), the Supreme Court deleted the penalty and has accepted that human errors do happen in spite of caliber, expertise and due care. Mistakes,....
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....f deduction under section 80-IB of the Act and accordingly allowed the claim at the rate of 30% and nowhere held that the mistake was pointed out by the Assessing Officer to the assessee. When the assessee itself noticed the mistake and came forward and offered the income for taxation, the assessee cannot be held in default for furnishing inaccurate particulars. 4.7 In view of above discussion, we are of the opinion that the excess claim under section 80-IB of the Act made by the assessee was on the basis of the bonafide mistake of the Auditor and the assessee cannot be held for furnishing inaccurate particulars of income and, accordingly, the penalty levied under section 271(1)(c) of the Act on the incorrect claim of deduction under section 80-IB is deleted. Accordingly, the grounds 2 to 2.5 of the appeal are allowed. 5. In grounds no. 3 to 3.1 the assessee has challenged penalty levied on disallowance of deduction under section 80-IB of the Act amounting to Rs. 6,95,173/- on account of higher allocation of head office/common expenses. The facts in respect of the disallowance are that the Assessing Officer in the details furnished during the course of assessment observed tha....
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.... debatable issue, was affirmed and the deletion of penalty by the Tribunal was accordingly held to be justified. 5.3 On the contrary, learned Sr. Departmental Representative relied on the findings of the authorities below. 5.4 We have heard the rival submissions and perused the material on record. In the case of CIT Vs. Dharmpal Premchand Ltd. (supra) the assessee was engaged in the manufacture of flavoured chewing tobacco and kiwam and claimed deduction under section 80-IA and 80-IB of the Act. The claim of deduction of the assessee was denied and penalty under section 271(1)(c) of the Act was levied. The learned Commissioner of Income Tax(Appeals) deleted the penalty accepting the assessee's contention that it had disclosed all material facts pertaining to the computation of deduction admissible under section 80-IA and 80-IB that the directors remuneration had been duly debited in the head office and no amount was allocated towards a unit and the interest earned on banks and interest paid to the others had a direct nexus to the business activities and, therefore, the deduction of said amount would be admissible to the assessee. The Tribunal held that allocation of expenses ....
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....ute, and accordingly the grounds of the appeal from 3 to 3.1 are allowed. 6. In ground No. 4 the assessee has challenged levy of penalty of in respect of disallowance of interest of Rs. 19,200/- paid in respect of the loan taken from Mr. Ravi Kapoor, which was treated as unexplained cash credit under section 68 of the Act in the preceding assessment year. 6.1 The facts in respect of the issue in dispute are that in the assessment proceeding the AO made addition of Rs. 1,06,200/- for interest paid in respect of loan taken from five parties, which were held as unexplained cash credit in earlier years. The penalty was levied only in respect of one loan from Mr. Ravi Kapoor which was only finally sustained by the ITAT as unexplained cash credit. The learned Commissioner of Income Tax(Appeals) has upheld the penalty on the ground that the assessee has shown a false entry in the form of unexplained cash credit which amounted to furnishing of inaccurate particulars of income. 6.2 Before us learned Authorized Representative of the assessee submitted that all documents in respect of the cash creditors were submitted before the Assessing Officer and relied on the judgment of the Pun....
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....uirements of section 68 of the Act. The assessee has placed reliance on the judgment of the Hon'ble Punjab and Haryana High Court in the case of CIT versus Sunila Sharma (supra). In the facts of the case the Hon'ble High Court has held as under: "9. The factual matrix of the case has been discussed above. The assessee furnished the details regarding the bank accounts from where she got the gifts, the dates, the details of the bank accounts and the demand drafts of Toronto Dominion Bank, Canada were furnished to substantiate that the gift was from her brother who was residing at Canada. The concealment, as such, in the facts and circumstances, was missing, as admittedly, it was not that the amount was detected subsequently but the factum of the gifts from the brother and sister had been mentioned in the note in the income tax return. The explanation was later on asked for and further particulars could not be furnished on account of sour relationship and the fact that she was not in touch with her brother who had allegedly shifted Canada, thereafter. 10. In such circumstances, the discretion which has been exercised by the Tribunal, in setting aside the penalty, cannot be said ....