AI Drafter 
TaxTMI 
TaxTMI 
2018 (10) TMI 1268
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.... 2016 are with reference to A.Y. 2004-05 and 2005-06 respectively. Since common questions of fact and law arise in all the three appeals, they are being disposed of by this common order and Judgment. 2. For the sake of convenience, we shall refer to the facts as narrated in Income Tax Appeal No. 1133 of 2016 which is in relation to the A.Y. 2003-04. The assessee (Dhariwal Industries Ltd.) is a company engaged in the business of manufacturing of Pan Masala as well as manufacturing and sale of rawa, atta, maida and salt. Over and above this, they are also involved in sale of mineral water and are also doing business in the area of power generation by wind mills. It is the case of the Revenue that for the A.Y. 2003-04, the assessment was completed under Section 143(3) of the Income Tax Act, 1961 (I.T.Act) on 31st March, 2006. After completion of the assessment, the Assessing Officer (A.O.) also initiated penalty proceedings under Section 271(1)(c) of the I.T.Act and the penalty order was passed by the A.O. on 26th March, 2008 levying penalty of Rs. 3,68,00,000/- with respect to the following additions:- (1) Dis-allowance u/s 80IA restricted to gross total income computed in o....
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....was correct in holding that since the appeal in quantum proceedings is admitted by the Honourable High Court, no penalty under Section 271(1)(c) can be levied?" 6. In all these appeals, we find that the appeals with reference to the quantum proceedings have been admitted by this Honourable Court on a substantial question of law. That has also been recorded by the Tribunal in the impugned order and the same is also not disputed before us. We find that the appeals were admitted as this Court found that there were debatable and arguable questions raised in the quantum proceedings. This being the case, we find that the Tribunal, in the facts and circumstances of the present case, was fully justified in confirming the order of the CIT (A) in all the three assessment years for deleting the penalty as far point Nos. 1 and 2 (reproduced above) are concerned. 7. We are further fortified in taking this view when one considers the findings and observations of the CIT(A) in his order dated 20th February 2009. It is not in dispute that the penalty was imposed under section 27(1)(c) by the Assessing Officer in respect of Point No.1 mentioned above which related to claiming deduction under ....
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....ve. 9. In this regard, we would also like to refer to a decision of the Supreme Court in the case of CIT, Ahmedabad v/s Reliance Petro Products Pvt. Ltd, reported in (2010) 11 SCC 762 wherein it has inter alia been held that an incorrect expenditure claimed in the return was held not to be liable to penalty. The Supreme Court inter alia held that merely because the claimed expenditure was not accepted or was not acceptable to the Revenue, the same would not attract penalty under section 271(1)(c) of the Income Tax Act, 1961. The Supreme Court clearly held that in order to impose penalty, there should be (i) concealment of particulars of income by the Assessee; or (ii) the Assessee must have furnished inaccurate particulars of his income. Submitting an incorrect claim in law would not tantamount to furnishing inaccurate particulars of income or its concealment, was the final finding of the Supreme Court. Paragraphs 17 to 21 of this decision and which are relevant for our purpose read thus :- "17. We are not concerned in the present case with mens rea. However, we have to only see as to whether in this case, as a matter of fact, the assessee has given inaccurate particulars.....
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....epted or was not acceptable to the Revenue, that by itself would not, in our opinion, attract the penalty under Section 271(1)(c). If we accept the contention of the Revenue then in case of every return where the claim made is not accepted by the assessing officer for any reason, the assessee will invite penalty under Section 271(1)(c). That is clearly not the intendment of the legislature. 21. In this behalf the observations of this Court made in Sree Krishna Electricals v. State of T.N. [(2009) 11 SCC 687 : (2009) 23 VST 249] as regards the penalty are apposite. In the aforementioned decision which pertained to the penalty proceedings in the Tamil Nadu General Sales Tax Act, the Court had found that the authorities below had found that there were some incorrect statements made in the return. However, the said transactions were reflected in the accounts of the assessee. This Court, therefore, observed: (SCC p. 688, para 7) "7. So far as the question of penalty is concerned the items which were not included in the turnover were found incorporated in the appellant's accounts books. Where certain items which are not included in the turnover are disclosed in the dealer....