2007 (9) TMI 636 - HC - Income Tax

Summary

Issues involved: Assessment of deduction under Section 80 HHC and Section 80 HHB of the Income Tax Act, 1961, imposition of penalty u/s 271(1)(c) by the Assessing Officer, cancellation of penalty by CIT(A) and Tribunal, satisfaction for initiating penalty proceedings under Section 271(1)(c) of the Act.

The Assessee, engaged in the business of export of engineering goods and services, initially claimed a deduction under Section 80 HHC of the Income Tax Act, 1961. Subsequently, the Assessee filed a revised return seeking a deduction under Section 80 HHB of the Act. The Assessing Officer rejected the revised claim, citing lack of evidence to support the eligibility criteria for the deduction under Section 80 HHB, along with disallowing other claimed deductions.

The Assessing Officer imposed a penalty of Rs. 5,50,112 under Section 271(1)(c) of the Act. However, the CIT(A) overturned this decision, stating that there was no basis for imposing the penalty as the Assessee had not concealed income or provided inaccurate particulars. The Tribunal upheld this view, emphasizing the lack of recorded satisfaction by the Assessing Officer for initiating penalty proceedings.

The High Court, while acknowledging the non-applicability of a previous court decision, concurred with the CIT(A) and Tribunal that there was no concealment of income or furnishing of inaccurate particulars by the Assessee. The Court noted that the issues in the assessment were debatable, and even if the Assessee was not entitled to the deduction under Section 80 HHB, it did not imply an intention to conceal income for undue advantage. Consequently, the Court found no substantial question of law and dismissed the appeal.