2011 (1) TMI 760 - HC - Income Tax

Penalty u/s 271(1)(c)- Whether the Income Tax Appellate Tribunal was right in law in deleting the penalty imposed u/s 271(1)(c) on the amount of deduction claimed u/s 80IB on export incentives - Hence, the matter is covered against the revenue by order of this Court in CIT v. M/s Raj Overseas (2010 -TMI - 204320 - PUNJAB AND HARYANA HIGH COURT) - Accordingly, the appeal is dismissed.

Summary

Issues:
1. Appeal under Section 260-A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal.
2. Deletion of penalty u/s 271(1)(c) on the amount of deduction claimed u/s 80IB on export incentives.
3. Justification of the decision to delete the penalty in light of relevant Supreme Court decisions.
4. Quashing of penalty order u/s 271(1)(c) based on the absence of deliberate concealment.

Analysis:

1. The appeal was filed under Section 260-A of the Income Tax Act, 1961, challenging the order of the Income Tax Appellate Tribunal. The substantial questions of law raised included the correctness of deleting the penalty imposed under section 271(1)(c) on the deduction claimed under section 80IB for export incentives. The issue revolved around the assessee allegedly filing inaccurate particulars of income by claiming the deduction despite the availability of a Supreme Court decision disallowing such deductions. The Tribunal's decision was questioned based on the Supreme Court's ruling in Sterling Foods Vs. CIT and whether it constituted concealment under the Income Tax Act.

2. The second issue addressed whether the Tribunal's decision to delete the penalty under section 271(1)(c) was justified in light of the Supreme Court's decision in Liberty India Vs. CIT, reaffirming the non-allowability of 80IB deduction on export incentives. The argument centered on the consistency of the Tribunal's decision with the Supreme Court's position on the matter, raising doubts about the correctness of the penalty deletion.

3. The third issue examined the justification behind the Tribunal quashing the penalty order under section 271(1)(c) by citing the absence of deliberate concealment. This decision was contrasted with the Supreme Court's ruling in Dharmendra Textile Processors, emphasizing the need for substantiated explanations to avoid being deemed as concealment under Explanation-1(b) of the Income Tax Act. The Tribunal's assessment of the situation in light of the Apex Court's judgment was questioned, highlighting the importance of meeting the standards set by the higher court.

4. Ultimately, the court noted that the matter was already settled against the revenue by a previous order in CIT v. M/s Raj Overseas. Consequently, the appeal was dismissed based on the precedent set by the earlier decision, indicating a consistent stance by the court on similar matters.