2016 (8) TMI 521

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....der of penalty. 2. This court, while admitting the appeal, has framed the following substantial question of law: "Whether on the facts and in the circumstances of the case the tribunal was right in law in cancelling the order of penalty under section 271(1)(c)?" 3. The facts of the case are that the assessee company filed its return of income on 21.12.1992 declaring an income of Rs. 1,15,800/- which was processed under section 143(1)(a) of the Income-tax Act on 5.2.1993 accepting the returned income. Thereafter, regular assessment under section 143(3) of the Act was finalized on 31.3.1995 and total income of the assessee was determined at Rs. 44,11,860/-. The penalty under dispute was levied by the Assessing Officer under section 2....

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.... business premise of the appellant company on 19.4.1994 wherein the department could detect the concealment of income by the appellant company. In his statement, Shri S.K. Gandhi, Managing Director of the appellant company clearly admitted that his claim regarding expenditure amounting to Rs. 35.48 lacs is not correct and the company had not made any capital expenditure which was meant for research since the inception of the company. Further Shri A.M. Saiyed, production Supervisor also admitted in his statement that no research was carried out by the company. Further during the course of search, no equipment for carrying out any scientific research were found installed at the factory premises of the appellant company. Therefore, it is appar....

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....osed the fact that time limit for claiming deduction on the profit on the production of industrial oils and additives has expired. Therefore, it is a clear case where the appellant company has tried to claim excessive and unreasonable deduction to which it was not entitled. Therefore, action of the assessing officer in levying of penalty under section 271(1)(c) of the I.T. Act on this issue is sustained and the penalty is confirmed." 4.1 The learned counsel for the revenue has further contended that though no equipments for carrying out any scientific research were installed at the factory premises, the assessee has claimed capital expenditure. Further, despite no R & D activity was carried out by the assessee, expenditure on R & D was c....