TMI Blog2018 (3) TMI 1867X X X X Extracts X X X X X X X X Extracts X X X X ..... come of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars - See Reliance Petroproducts Ltd. [2010 (3) TMI 80 - SUPREME COURT] . 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) - Decided in favour of assessee. Levy of penalty on the claim of deduction u/s 80IC w.r.t. carrying out substantial expansion in the 8th year is directed to be deleted. Penalty on interest incurred under section 14A - HELD THAT:- The appellant has claimed that the dividend received has not been included in the income eligible for deduction u/s 80IC and the same has been claimed exempt under the I.T. Act, 1961. The perusal of the computation sheet shows that the submissions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee 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 ₹ 220282/- Misc. receipt of ₹ 1,14,089/- and sundry balances written back ₹ 99/- which is unjustified, unwarranted and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total ₹ 7,63,55,788/- 5. Before us the assessee has submitted that the details of expansion were submitted during the course of assessment proceedings. The genuineness of the claim has not drawn any adverse inference. It was argued before the Ld. CIT(A) that he is not hit by the provisions of section 271(1)(c) as it has neither concealed 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, asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of inaccurate particulars. The term 'inaccurate particulars' is not defined. Furnishing of an assessment of value of the property may not by itself be furnishing of inaccurate particulars. Even if the explanations are taken recourse to, a finding has to be arrived at having regard Clause (a) of Explanation 1 that the Assessing Officer is required to arrive at a finding that the explanation 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. re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith levy of penalty u/s 271(1)(c) on the disallowance of₹ 5,55,241/- u/s 14A r.w.r8D. 6. The Ld. AO while framing the order u/s 271(1)(c) of the IT Act on 23.02.2016 proceeded with levy of penalty of ₹ 2,35,93,940/- on ₹ 7,63,55,788/- the breakup of which is as under: The assessee has further relied on the decision of the Hon'ble Supreme Court in the matter of Dilip N. Shroff v. Joint Commissioner of Income-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 ₹ 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 alre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alment or furnishing of inaccurate particulars of income. Held, penalty under s. 271(1)(c) was not leviable [AY 1998-99]. (Page 65 to 79 of paper book) iii. CIT vs Liquid investment and Trading Co. [ITA 240/2009 dated 5/10/2010 - Delhi HC] - Disallowance u/s 14A of the Act was a debatable issue. Also, High Court had admitted the appeal of the assessee on quantum. Hence, penalty was not leviable. iv. Skill Infrastructure Ltd. V.ACIT [2013] 157 TTJ 565 (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 ₹ 21,84,505/- also included dividend income of ₹ 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 sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h year on undertaking substantial expansion and it was claimed to be first year/initial year for claiming 1 00% deduction under section 801C of the Act. Thus, the claim of the assessee was not false and was also not wrong. The assessee made claim of 1 00% deduction under section 80IC of the Act on the basis of substantial expansion carried out in financial year relevant to the assessment year under appeal. The assessee, therefore, furnished ail particulars of income in the return 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 de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be accurate, not exact or correct, not according to the truth or erroneous. Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty u/s 271(1)(c). A mere making of a claim which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding tlie income of the assessee. Such a claim made in the return cannot amount to furnishing 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 no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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