2009 (9) TMI 960 - AT - Income Tax

Summary

Issues Involved:
1. Deletion of penalty u/s 271(1)(c) for furnishing inaccurate particulars of income.
2. Inclusion of scrap sales in total turnover for deduction u/s 80HHC.

Summary:

Issue 1: Deletion of Penalty u/s 271(1)(c)

The Revenue appealed against the deletion of a penalty of Rs. 27,73,921 imposed u/s 271(1)(c) for furnishing inaccurate particulars of income. The assessee defended the order by arguing that the penalty was levied before the Tribunal's order on the miscellaneous application was considered. The assessee claimed that the deduction was based on the advice of a chartered accountant and various judicial decisions. The Tribunal noted that the assessee had furnished complete particulars of income and relied on the advice of an expert, thus no penalty was leviable. The Tribunal cited several judicial pronouncements supporting the view that no penalty is imposable on debatable legal issues or where two views are possible. The Tribunal upheld the CIT(A)'s order, stating that the assessee made a bona fide claim based on expert advice, and there were no mala fides involved.

Issue 2: Inclusion of Scrap Sales in Total Turnover for Deduction u/s 80HHC

The Revenue contended that the assessee claimed higher deduction by excluding scrap sales from the total turnover, which was contrary to the provisions of the Act. The assessee argued that scrap sales were not included in the total turnover based on the chartered accountant's note and previous assessments. The Tribunal observed that the AO had recomputed the profit of business by excluding scrap sales from the turnover and profit of business, following the Tribunal's earlier decision. The Tribunal noted that the assessee's claim was based on the chartered accountant's certificate and judicial decisions, and there was a difference of opinion on the issue. The Tribunal concluded that the assessee did not furnish inaccurate particulars or conceal income, and the issue was debatable. Therefore, the penalty was rightly deleted by the CIT(A).

Conclusion:

The Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s order, confirming that no penalty u/s 271(1)(c) was leviable as the assessee made a bona fide claim based on expert advice and judicial precedents. The cross-objection filed by the assessee was allowed for statistical purposes only.