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2013 (1) TMI 677 - AT - Income TaxPenalty u/s 271(1)(c) - excess deduction u/s 10A on account of unrealized export proceeds - Held that - Assessee along with the return of income has filed its Audit Report and Form No. 56, intimating the realized and unrealized portions of export proceeds. Also found from the papers appended by the assessee in its APB that before the finalization of assessment for the current year, the assessee had realized substantial export proceeds and, dutifully, it was submitted before the AO, as to how much unrealized export proceeds have been received by it and for which unit. In these circumstances, since the assessee had made adequate disclosure in its return with respect to the unrealized export proceeds at the time of filing its ROI, no fault on the conduct of the assessee found. Thus respectfully following the decision in the case of DSL Software Ltd. (2012 (4) TMI 360 - ITAT DELHI) and the Circulars issued by the competent authority, i.e. RBI, with regard to receipt of export proceeds, and also the fact that the AO himself had dropped the penalty proceedings on same facts in the subsequent year penalty under section 271(1)(c) is not exigible in the instant case - in favour of assessee.
Issues:
Deletion of penalty u/s 271(1)(c) by CIT(A) based on the claim of excess deduction u/s 10A on unrealized export proceeds. Detailed Analysis: 1. Deletion of Penalty u/s 271(1)(c): The primary issue in this case revolves around the deletion of the penalty u/s 271(1)(c) of Rs. 4,62,127 imposed by the Assessing Officer (AO). The appellant claimed exemption u/s 10A of the Income Tax Act based on unrealized export proceeds, leading to the penalty. The AO observed that the assessee failed to provide adequate reasons for treating unrealized export proceeds as eligible for exemption u/s 10A, resulting in the penalty proceedings. 2. Submission and Arguments: During the penalty proceedings, the appellant reiterated that the information about unrealized export proceeds was disclosed in the Audit Report and Form No. 56 filed with the return of income. The appellant argued that there was no deliberate attempt to make an illegitimate claim u/s 10A, citing the decision of the Supreme Court in a similar case. Despite the appellant's submissions, the AO levied the penalty. 3. CIT(A) Decision and Rationale: The CIT(A) analyzed the facts and held that the appellant had made a reduced claim based on admissible deductions. The CIT(A) referred to relevant court decisions and RBI guidelines, emphasizing that the appellant's claim did not constitute inaccurate particulars of income. The CIT(A) concluded that since there was no concealment or suppression of facts, the penalty was unjustified and deleted it. 4. Appellate Tribunal Decision: The Appellate Tribunal considered both parties' arguments and the precedent set by a coordinate Bench in a similar case. The Tribunal agreed with the CIT(A)'s reasoning and upheld the deletion of the penalty. The Tribunal emphasized that the appellant had adequately disclosed information about unrealized export proceeds, and the penalty was not warranted under section 271(1)(c). 5. Conclusion: Ultimately, the Appellate Tribunal upheld the CIT(A)'s decision to delete the penalty u/s 271(1)(c) imposed by the AO. The Tribunal found that the appellant had made proper disclosures regarding unrealized export proceeds, and there was no intention to conceal income or provide inaccurate particulars. The decision was based on the appellant's compliance with RBI guidelines and the absence of malafide intent, leading to the penalty being deemed unsustainable in law. (Order pronounced in the open Court on 9.1.2013.)
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