2008 (9) TMI 945 - HC - Income Tax

Summary

Issues involved: Assessment of penalty u/s 271(1)(c) of the Income-tax Act, 1961 in connection with deduction claimed u/s 80HHD.

Summary:

Levy of Penalty u/s 271(1)(c) in connection with deduction u/s 80HHD:
The appeals arose from a Tribunal order related to assessment years 2000-01 and 2001-02 concerning the levy of penalty u/s 271(1)(c) of the Income-tax Act, 1961, in relation to the deduction claimed u/s 80HHD. The Tribunal accepted the exclusion of disclaimed foreign exchange receipts for computing the deduction under section 80HHD, which was upheld by the Court. The Tribunal concluded that the basis for imposing penalty under section 271(1)(c) did not exist in this scenario. The Tribunal's decision was based on the acceptance of the assessee's position in the quantum proceedings, leading to the dismissal of the appeal by the Court.

Inclusion of Interest Income for Deduction u/s 80HHD:
Regarding the inclusion of interest income in business income for computing deduction under section 80HHD, the Tribunal considered it a debatable issue pending before the Court. The Tribunal found the assessee's claim for deduction under section 80HHD to be bona fide, based on a possible interpretation, and supported by all relevant material facts. It was determined that the assessee did not conceal income by providing inaccurate particulars, thus not warranting penalty under section 271(1)(c). The fact that the claim was not fully accepted in the quantum proceedings did not justify the imposition of penalty under the said Act.

Conclusion:
The Court agreed with the Tribunal's findings on the penalty proceedings, stating that the Tribunal correctly applied the law and facts. No grounds for interference were found, and no substantial question of law arose for consideration. Consequently, the appeals were dismissed.