TaxTMI 
TaxTMI 
2020 (1) TMI 126
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.... No. 4883 /Del/ 2011 and CO No. 03/Del/2019. 2. Brief facts of the case are that the assessee is a company engaged in the business of manufacturing of plastic film used in packaging industries, printed article in pouch form and is a diaphragm, having started a new manufacturing unit at Baddi (HP). For the assessment year 2004-05 they have filed their return of income on 31/10/2004 declaring nil income after claiming deduction under section 80 IC of the Income Tax Act, 1961 (for short "the Act") to the tune of Rs. 9,13,69,859/-. There was a search and seizure operation in the M/s Flex group of cases on 23/02/2006 and the case of the assessee was also covered under section 132(1) of the Act. According to the assessee, on 31/3/2006 they have filed a revised return declaring income at Rs. 7,67,16,085/- wherein the deduction under section 80 IC of the Act was claimed at Rs. 1, 46, 53, 774/-. The revised income was computed by the assessee after excluding the income of Rs. 8, 44, 18, 0 24/- received by the assessee on account of license fee, from the direction earlier claimed under section 80 IC of the Act. 3. Pursuant to the search in section 132(1) of the Act, notice under section 15....
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....e unit and therefore, were rightly not deducted from the income of the eligible unit at Baddi; that the proceedings for penalty are different from proceedings for assessment and every addition disallowance does not warrant the imposition of the penalty; that the penalty cannot be levied for mere claiming any deduction when there is no concealment of income or information from the learned Assessing Officer; and that all the material facts for computation of income were brought on record by the assessee and none of such particulars amounted to concealment or furnishing of inaccurate particulars thereof. Assessee also placed reliance on a catena of decisions in support of their submissions. 6. Learned Assessing Officer, however, by order dated 30/3/2010 passed in section 271(1)( c ) of the Act, did not agree with the assessee on several of these submissions and held that this is not a case of simple mistake committed by the counsel of the assessee and a heavy claims for deduction under section 80 IC was made without any sound legal basis and therefore, the reliance placed by the assessee on the judgement of the Hon'ble Delhi High Court in the case of M/s Comet Leasing and Finance Ltd....
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.... by the assessee. 10. Ld. CIT(A) further observed that the understanding of law on this issue by the assessee that they did not necessarily be a direct nexus between the activity of industrial undertaking and the profit and gains, was in accordance with the addition of the Hon'ble jurisdictional High Court in the case of CIT vs. Eltec SGS (P) Ltd 2008-TIOL-156-HC-Delhi-IT. He observed that the fact that the assessee, consequent upon the search, withdrew its claim of 80IC of the Act of the Act direction on the license fee, vide return of income filed in response to section 153A of the Act, does not take away the fact that the issue as to the income on which 80IC of the Act could be claimed, remained debatable as confirmed by the decision of the Hon'ble judicial High Court in the case of Eltec SGS (supra), and such a debate has been settled finally by the Hon'ble Supreme Court in the case of Liberty India Private Limited 317 ITR 218. 11. As a matter of fact, Ld. CIT(A) found that the disclosure was made in the return of income itself, and it cannot be said that the assessee had concealed or submitted any inaccurate particulars of income and therefore the case of the assessee is sq....
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...., that does not ipso facto mean that there is either concealment of income or furnishing of inaccurate particulars thereof. He placed reliance on the decision of the Hon'ble Apex Court in the case of Reliance Petroproducts (supra). He reiterated the argument that after search under section 132 of the Act, in the case of abated proceedings, penalty under section 271(1)( c ) of the Act cannot be levied with reference to the return filed under section 139 of the Act, and also finding fault with the form of notice issued under section 271(1)( c ) of the Act read with section 274 of the Act. 15. We have gone through the record in the light of the submissions made on either side. In the assessment order dated 31/12/2007, learned Assessing Officer proposed to levy the penalty because the assessee had increasing the amount of deduction claimed under section 80 IC of theAct over the earlier figure of Rs. 1, 46, 53, 774/- implying manipulation in the accounts of the assessee, because, but for the notice under section 153A of the Act, the assessee would not have had any chance of filing a revised return showing a lesser figure of income than that was shown in the earlier return. Ultimately t....
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....s not bar or prohibit a person from making a claim, when he knows the matter is going to be examined by the Assessing Officer. 17. We are inclined to approve the approach of the Ld. CIT(A) in analysing the facts of the case in the light of the decisions reported in the cases of Arsudana Spinning Mills Ltd 326 ITR 429 of Hon'ble Delhi High Court and CIT v. Reliance Petroproducts (P.) Ltd. reported in 322 ITR 158 of the Hon'ble Apex Court. In the case of CIT v. Reliance Petroproducts (P.) Ltd. reported in 322 ITR 158 the Hon'ble Apex Court, while interpreting the provisions of section 271(1)(c) of the Act, held that a glance at the said provision would suggest that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. In the facts of that case, the court found that it was not a case of concealment of the particulars of the income, nor was it the case of the revenue either. However, the counsel for the revenue suggested that by making an incorrect claim for the expenditure on interest, the assessee had furnished inaccurate particulars of income. The H....