TaxTMI 
TaxTMI 
2025 (2) TMI 158
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....hout considering that in the assessment order penalty was initiated for furnishing inaccurate particulars of income and in the penalty order also the penalty was imposed for the same default. 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT()A is correct in deleting the penalty u/s. 271(1)(c) of Act ignoring the fact that the assessee was fully aware of his default regarding furnishing of inaccurate particulars of income as is clearly mentioned in order passed u/s. 143(3) r.w.s. 263 and the assessee was offered adequate opportunity before the Assessing Officer to set out his defence against levy of penalty?." 3. The relevant facts in brief are that the Assessee, a public Limited company engaged, inter alia, in manufactured and sale of cement, filed original return of income for the Assessment Year 2011-2012 on 30/11/2011. Thereafter, the Assessee filed a revised return of income on 27/11/2012, which was selected for regular scrutiny. Assessment under Section 143(3) of the Act was framed on the Assessee vide Assessment Order, dated 16/03/2015. Subsequently, the aforesaid Assessment Order was revised vide order, dated 29/03/2017, passed under ....
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.... not have been levied under Section 271(1)(c) of the Act for furnishing inaccurate particulars of income as the Assessee had made disclosure of the relevant facts. 6. Being aggrieved by the above order passed by the CIT(A), the Revenue has preferred the present appeal before the Tribunal on the grounds reproduced in paragraph 2 above. 7. We have heard both the sides and have perused the material on record. 8. It emerges that during the original assessment proceedings the Assessing Officer noted that the Assessee had created Provision for Mine Reclamation Expenses amounting to INR.3.98 Crores which were included under the head 'Manufacturing & Other Expenses' debited to the Profit & Loss Account for the relevant previous year. The Assessee was asked to furnish details of Mine Reclamation Expenses and explain the allowability of the same as deduction vide Query No. 36 raised by way of Notice, dated 05/12/2014, issued by the Assessing Officer. In response, the Assessee filed Reply Letter, dated 16/12/2014, and provided justification for claim of deduction of Mine Reclamation Expenses which reads as under: "21.1 During the previous year relevant to the assessment year....
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....l expediency of the business." 9. On perusal of the above explanation offered by the Assessee, it can be seen that the provision for Mine Reclamation Expenses was made in terms of Rule 34 of Mineral Conservation and Development Rules, 1988, framed under Section 18 of Mines And Minerals Regulation and Development Act 1957, which oblige the holder of license to undertake site restoration, reclamation, and rehabilitation of land affected by prospecting or mining operations. It was the contention of the Assessee that the mining activity formed part of the business of the Assessee-company, and therefore, the reclamation expenses were incurred wholly and exclusively for the purpose of business of the Assessee on account of commercial expediency. 10. During the proceeding before the Tribunal, it was contended on behalf of the Revenue that the Assessing Officer had in Paragraph 11.7 of the Penalty Order clearly returned a finding that the Assessee had failed to provide a reasonable explanation for making claim of deduction in respect of provision Mine Reclamation Expenses. Per contra, it was a contended on behalf of the Assessee that the CIT(A) had appreciated the explanation offered....
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....e working of reclamation expenses liability details for existing mines for different sites were also furnished by the Assessee during the assessment proceedings along with the details of actual Mines Reclamation Expenditure incurred during the relevant previous year aggregating to INR.2.18 Crores. 13. On perusal of the abovesaid documents/details (placed before us as part of the paper-book), we find that the complete disclosure of all primary facts was made by the Assessee during the assessment proceedings. Further, the Assessee had also provided explanation that the deduction for provisions for Mine Reclamation Expenses was claimed on the understanding that the Assessee was under statutory obligation to incur the aforesaid expenses for restoration/reclamation of mining sites as per the provisions of Mineral Conservation and Development Rules, 1988, framed under Section 18 of Mines And Minerals Regulation and Development Act 1957. Rule of 34 of the aforesaid rules reads as under: "34. Reclamation and rehabilitation of lands: Every holder of prospecting licence or mining lease shall undertake the phased restoration, reclamation and rehabilitation of lands affected by pro....
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.... dated 29.03.2017, Hence, an amount of Rs. 3,98,19,350/- is herby disallowed and added to the total income of the assessee. 5.2 Penalty proceedings initiated separately for furnishing inaccurate particulars of income u/s 271(1) (C) of the IT, Act, 1961." (Emphasis Supplied) 15. On perusal of above, we find that the Assessing Officer had failed to appreciate that the amount of INR.3.98 Crores included Mine Reclamation Expenses of INR.2.18 Crores actually incurred during the relevant previous year. Further, there was no discussion on the explanation furnished by the Assessee. Similarly, while levying penalty vide order dated 31/03/2022 passed under Section 271(1)(c) of the Act the Assessing Officer has concluded that the Assessee had failed to offer any explanation. We find that the aforesaid finding returned by the Assessing Officer is factually incorrect. In our view, the Assessee had disclosed all the primary facts. Further, even if it is assumed that the Assessee had furnished inaccurate particulars of income, we are of the view that the Assessee had discharged the burden cast under Section 273B of the Act to prove that the Assessee had reasonable cause for the same. ....