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2012 (7) TMI 403 - AT - Income TaxLevy of Penalty u/s 271(1)(c) - AO stated that the assessee was not entitled to claim deduction u/s 80HHC - Held that - Not even a whisper has been made in the penalty order as to which specific particulars were furnished inaccurate or were concealed. The expression has concealed the particulars of income and has furnished inaccurate particulars of income have not been defined either in section 271 or elsewhere in the Act - AO has not been able to establish that the claim of the assessee for deduction u/s 80HHC with respect to export of capital goods which was held to be not derived from business of export was not bona fide or that any specific particulars were concealed or furnished inaccurate. A mere rejection of the claim of the assessee by relying on different interpretations does not amount to concealment of the particulars of income or furnishing inaccurate particulars thereof by the assessee - deletion of penalty levy - in favour of assessee.
Issues Involved:
1. Deletion of penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961. 2. Claim of deduction under Section 80HHC for export of capital goods. 3. Interpretation of "derived from" vs. "attributable to" in Section 80HHC. 4. Whether the claim was bona fide and supported by statutory certificates. 5. Applicability of penalty for furnishing inaccurate particulars of income or concealment of income. Issue-Wise Detailed Analysis: 1. Deletion of Penalty Imposed under Section 271(1)(c): The Revenue appealed against the CIT(A)'s order which deleted the penalty of Rs. 6,62,266 imposed by the Assessing Officer (AO) under Section 271(1)(c) of the Income Tax Act, 1961. The AO had imposed the penalty on the grounds that the assessee furnished inaccurate particulars of income by claiming a deduction under Section 80HHC, which was disallowed. 2. Claim of Deduction under Section 80HHC for Export of Capital Goods: The assessee claimed a deduction of Rs. 16,74,503 under Section 80HHC for the export of capital goods such as GTX-II, Chassis, MTGR, VME Board to a company in Turkey. This claim was based on a certificate issued in statutory form No. 10CCAC by Vaish & Associates, Chartered Accountants. The AO disallowed the claim, stating that the income was not derived from the business of export of goods and merchandise but from the export of capital goods. 3. Interpretation of "Derived From" vs. "Attributable To" in Section 80HHC: The AO argued that the term "derived from" used in Section 80HHC implies a direct nexus with the business of export, unlike "attributable to" used in Section 80E. Therefore, the deduction claimed by the assessee was not allowable as the income was not derived from the export business. 4. Whether the Claim was Bona Fide and Supported by Statutory Certificates: The assessee contended that the claim was bona fide, supported by a statutory certificate, and all particulars were furnished to the AO. The CIT(A) accepted this contention, noting that the claim was based on a certificate from a leading firm of Chartered Accountants and was the first year of such a claim by the assessee. The CIT(A) concluded that the issue was debatable and the claim was made in good faith. 5. Applicability of Penalty for Furnishing Inaccurate Particulars of Income or Concealment of Income: The CIT(A) and the Tribunal found that the assessee had disclosed all relevant particulars and the claim was made based on a statutory certificate. The Tribunal referred to several judgments, including the Supreme Court's decision in CIT vs. Reliance Petroproducts Pvt. Ltd., which held that a mere disallowance of a claim does not amount to furnishing inaccurate particulars or concealment of income. The Tribunal concluded that the AO did not establish that the claim was not bona fide or that any particulars were concealed or inaccurately furnished. Conclusion: The Tribunal upheld the CIT(A)'s order, stating that the penalty under Section 271(1)(c) was not justified as the assessee had made a bona fide claim supported by a statutory certificate and disclosed all relevant particulars. The appeal of the Revenue was dismissed, and the deletion of the penalty was confirmed. The judgment emphasized that mere rejection of a claim does not constitute concealment or furnishing of inaccurate particulars, especially when the claim was made in good faith and all facts were disclosed.
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