2022 (3) TMI 1276

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....erred in restricting levy of penalty under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") to the extent of 50% of addition i.e. Rs. 4,29,000/- 3. Brief facts of the case is that the assessee is a private limited company engaged in the business of trading in intermediate drugs, chemicals and pharmaceuticals for the Asst.year 2006-07. The assessee filed its return of income on 13.12.2006 declaring a loss of Rs. 11,89,310/-. During the regular assessment made under section 143(3) of the Act, the ld.AO disallowed a sum of Rs. 25,48,883/- in respect of R&D expenses on the ground that R&D activities were not carried out by the assessee during the assessment year even though it has furnished a copy of certi....

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....re the Tribunal. 4. Before us, the ld.counsel for the assessee has placed on record copy of decision of the ITAT dated 9.12.2021 in assessee's own case in ITA No.991/Ahd/2019 for the Asstt.Year 2005-06 wherein the balance 50% of the penalty was also deleted, and therefore prayed that applying the same ratio, similar penalty in the present Asstt.year 2006-07 may also be deleted. However, there is no serious objection by the assessee on the above decision cited by the assessee. 5. We have given our thoughtful consideration on the above facts and Co-ordinate Bench decision. Operative portion of the decision cited (supra) in the assessee's own case for the Asst.Year 2005-06 read as follows: "8. We have heard the rival contentions....

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....0% of research and development expenses was inaccurate. Accordingly, it appears that the penalty provisions under section 271(1)(c) have to be invoked. Thus, if we apply this logic, then any addition made by the AO in the assessment would lead either to concealment of the particulars of income or furnishing inaccurate particulars of income. In other words the assessee furnishes the particulars of income in his income tax return which is subsequently verified by the revenue. If in the process of verification of the income of the assessee, the AO calculates different total income than the income declared by the assessee, the difference between incomes declared by assesses and assessed by the AO would amount to furnishing of inaccurate particu....

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....t all the facts relating such explanation and material to the computation of income have been disclosed by him, then the amount added or disallowed to the total income of the assessee shall be deemed as concealment of income. 8.4 Coming to the present case, we have to test whether the case of the assessee falls under the main provisions of section 271(1)(c) of the Act or explanation 1 attached with it. 8.5 As regards the main provisions of section 271(1)(c) of the Act, we find that the genuineness of the expenses were not doubted by the learned CIT (A). It was only alleged that the associated concern /sister concern have availed the benefit of the expenditures incurred by the assessee out of research and development activi....