TaxTMI 
TaxTMI 
2018 (3) TMI 1867
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....e penalty imposed under section 271(1)(c) ignoring the facts that the assessee was not eligible for income from currency fluctuation and escaped his income from tax willfully. 3. On the facts and in the circumstances, the Ld. CIT(A) was justified in deleting the penalty imposed under section 271(1)(c) ignoring the facts that the assessee should itself disallowed the proportionate interest after applying section 14A of the Income Tax Act, 1961 and escaped his income from tax willfully. 3. The assessee has raised the following effective grounds in his cross appeal in ITA NO. 1218/CHD/2016: 1. Under the facts and circumstances of the case and in law, the order dt. 16/09/2016 passed by the Ld. CIT(A), Shimla under section 250(6) of the Income Tax Act, 1961 is bad in law, illegal, without jurisdiction and void. 2. Under the facts and circumstances of the case and in law, Ld. CIT(A), Shimla has erred in affirming the order of the Ld. Dy. CIT, Circle Parwanoo, HP in imposing the penalty under section 271(1)(c) of the IT Act 1961 on claim of deduction under section 80IC on the interest received on margin money of Rs. 220282/- Misc. receipt of Rs. 1,14,089/- and sundry balances writt....
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.... any particulars of income nor furnished any inaccurate particulars of income. The assessee has relied on various case laws to support his case as per the record. The relevant extracts of the same are reproduced as under:- 10. In support of the appellant's contention that penalty u/s 271(1) (c) of the IT Act is not leviable under the fact and circumstances is duly supported by the following judicial pronouncements: (i) CIT Vs. Reliance Petroproducts (P)LTD. (2010) 230 CTR (SC) 320, wherein the hon'ble Court held as under: Penalty under s, 271(1)(c)-Concealment-Disallowance of claim for deduction - In order to attract the provisions of s, 271(1)(c), there has to be concealment of income or furnishing of inaccurate particulars of his income by the assessee -In the instant case, assessee claimed deduction of interest on loans taken by it for purchase of shares-AO disallowed such interest- Admittedly, no information given in the return was found to be incorrect or inaccurate-Hence, the assessee cannot be held guilty of furnishing inaccurate particulars-Making an incorrect claim in law cannot tantamount to furnishing of inaccurate particulars-Merely because the assessee cl....
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....ion offered by an assessee, in the event, he offers one was false. He must be found to have failed to prove that such explanation is not only not bona fide but all the facts relating to the same and material to the income were not disclosed by him. Thus, apart from his explanation being not bona fide, it should be found as a fact that he has not disclosed all the facts which were material to the computation of his income. The explanation having regard to the decision of this Court must be preceded by a finding as to how and as to in what manner he furnished the particulars of his income, it is beyond any doubt or dispute that for the said purpose the income Tax Officer must arrive at its satisfaction in this behalf. [See Commissioner of Income Tax v. Ram Commercial Enterprises Ltd. reported in [2000] 246 ITR 568 (Delhi) and Diwan Enterprises vs. Commissioner of Income Tax reported in [2000] 246 ITR 571 (Delhi).] (v) The Hon'ble High Court of Madhya Pradesh in the matter of Narendra Kumar Rajendra Kumar Jain vs. Commissioner of Income Tax reported in (1988) 174 fTR 479 (MP) while deciding on the issue of levy of penalty u/s 271(1)(c) of the Act held that the penalty has been....
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....e-Tax, Mumbai reported in (2007) 6 SCC 329 before the Ld. CIT(A). 7. With regards to levy of penalty on disallowance made u/s 14A, the assessee relied on the decision of the Hon'ble IT AT, Chandigarh bench in the case of Aarge Drugs P Ltd vs DCIT in ITA no 781/ Chd/2014 asstt year 2010-11 which held as under: As to the penalty levied on disallowance of Rs. 56.S5&- being expenses incurred on earning exempt income , the assessee has disclosed both the figures of expenses as well as income in its P&L account filed alongwith return of income and produced before us at paper book 21 & 22 of paper book II. There is no question of concealing or furnishing inaccurate particulars of income. The AO on part of deduction u/s 80IC on same facts has already dropped the penalty proceedings. The case of the assessee is squarely covered by the decision of the Apex Court in Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158 (SC). The penalty imposed of Rs. 19,224/- is therefore hereby deleted. The relevant extracts of the submission is reproduced as under:- 8. The AO also levied penalty u/s 271(1)(c) of the IT act on disallowance of Rs. 5,55,241/- being disallowance u/s 14A r.w.r. 8....
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....65 (Mum.)(Trib.) - Disallowance u/s 14A does not call for penalty. It is respectfully submitted that appellant appeal on disallowance u/s 14A r.w.r 8D, being a debatable issue, is also admitted by Hon'ble High court of Himachal Pradesh and is pending for a decision. The assessee further drew attention of the Ld. CIT(A) to the fact that Other Income of Rs. 21,84,505/- also included dividend income of Rs. 10,50,047/- which has also been considered as part of Other income for the purpose of levy of penalty. It was submitted that Dividend income is separately shown in the computation of income and return of income for the year under appeal. The said dividend income, which is exempt u/s 2(22) and which is separately shown in the return of income is not liable for penalty u/s 271(1)(c) of the IT act, 1961, 8. With regards to levy of penalty on the issue of foreign exchange fluctuation the it was submitted that Ld AO while levying the penalty u/s 271(1)(c) in assessment 2010-11, excluded foreign exchange fluctuation from the levy of penalty. The Ld AO ought to have followed the same principle during the year under appeal and should have excluded foreign exchange fluctuation of Rs.....
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....turn of income as well as before Assessing Officer at the assessment stage. Nothing was concealed to the Revenue Department. Whole issue was thus, based upon interpretation of provisions of Section 80IC of the Act for claim of deduction under section 80IC @ 100% on undertaking substantial expansion in the assessment year under appeal by claiming it to be initial year. Prior to that, there may be no history against the assessee for making such a claim. The issue is wholly debatable and the appeal of the assessee is pending before Hon'ble High Court for consideration of the similar issue. Though, this Bench has not followed the decision of Delhi Bench in the case of Tirupati LPG Ltd.(supra) on quantum an<t decided the issue against the assessee on quantum, but there was favourable, order for making such a claim under section 80IC of the Act. Therefore, it is a case where there may be a difference of opinion between the assessee firm and the Assessing Officer for claim of deduction under section 80IC of the Act in 6th 100%. 7. Considering the above discussion, it is clear that assessee claimed deduction section 80IC in assessment year under appeal in a bonafide manner and mere fa....
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....rnishing inaccurate particulars." 8. Considering the above discussion, we are of the view that it is not a fit case of levy of penalty under section 271(1)(c) of the Act because it is well settled that levy of penalty is not automatic in each and every case as it depends upon facts and circumstances of the case. Since the assessee's claim of deduction under section 80IC have been allowed in earlier years @ 100% and admittedly assessee undertook substantial expansion in assessment year under appeal therefore, assessee made bonafide claim of deduction under section 80IC of the Act and there were no judicial pronouncements against the assesses: on the date of making such a claim. Therefore, it could not be construed that the assessee has furnished inaccurate particulars of income so as to levy the penalty under section 271(1)(c) of the Act. We, accordingly, set aside the orders of authorities below and cancel the penalty. 9. In the result, the appeal filed by the assessee is allowed. 10. The issue of levy of penalty on this issue under appeal is squarely covered by the order of the ITAT referred supra. Following the same, the levy of penalty on the claim of deduction u/s 80IC w....