2011 (10) TMI 522 - AT - Income Tax

Summary

Issues:
1. Confirmation of penalty under section 271(1)(c) of the Income-tax Act for disallowance of expenses claimed out of export sales.
2. Confirmation of penalty under section 271(1)(c) of the Income-tax Act for excess deduction claimed under section 80HHC.

Analysis:
1. The appeal pertained to the confirmation of a penalty under section 271(1)(c) of the Income-tax Act regarding disallowance of expenses claimed out of export sales. The assessee had claimed expenses amounting to Rs. 96,37,692 out of total export sales, alleging payment to a company for engineering work. However, investigation revealed the expenses were falsely claimed to reduce taxable income. The Tribunal referred to a previous case where a similar claim was allowed in full, indicating the expenditure was for business purposes. Consequently, the penalty related to this addition was deleted as no concealment was found.

2. The second issue concerned the penalty for an excess deduction claimed under section 80HHC of the Income-tax Act. The original claim of Rs. 39,77,265 was revised to Rs. 32,49,470 due to a calculation error. The assessee argued that the revision was based on known facts and figures, with no intent to conceal information. The authorized representative highlighted discrepancies in the calculation and contended that the revision was logical and did not amount to furnishing inaccurate particulars. Citing a relevant case law, the Tribunal held that there was no concealment of facts and directed the deletion of the penalty. The penalty for the excess deduction claim under section 80HHC was deemed wrongly levied, and the appeal of the assessee was allowed accordingly.