2013 (10) TMI 1221 - HC - Income Tax

Whether penalty levied under section 271(1)(c) in respect of disallowance made on account of curtailment of deduction under section 80-IB of the Income-tax Act, is correct Held that - The Assessing officer curtailed the deduction claimed under section 80-IB of the Act and consequent thereto levied penalty on account of curtailment of deduction - It was an instance of disallowance of a claim and not a case of concealment of income or furnishing inaccurate particulars of income Penalty not to be levied Decided against the Revenue. Whether penalty levied under section 271(1)(c) in respect of disallowance made on account of duty draw back and dividend income from foreign companies offered to tax only when the case was selected for scrutiny is justified Held that - Amount of duty draw back and dividend income from foreign companies was offered to tax by the assessee voluntarily and not after detection on the part of the Assessing Officer Penalty not to be allowed Decided against the Revenue.

Summary

Issues:
1. Deletion of penalty under section 271(1)(c) for disallowance under section 80-IB of the Income-tax Act, 1961.
2. Deletion of penalty under section 271(1)(c) for disallowance related to duty draw back and dividend income from foreign companies.

Issue 1: Deletion of penalty under section 271(1)(c) for disallowance under section 80-IB of the Income-tax Act, 1961:

The Tribunal deleted the penalty imposed under section 271(1)(c) on the respondent-assessee for curtailment of deduction under section 80-IB of the Act. The Commissioner of Income-tax (Appeals) also upheld the deletion of penalty. The Tribunal referred to an order from a previous year and found that the amounts were voluntarily offered to tax by the assessee, not due to detection by the Revenue. It was concluded that this was a case of disallowance of a claim, not concealment of income or furnishing inaccurate particulars. The Tribunal's decision was based on factual findings, and since the amounts were self-assessed by the assessee, the penalty was unjustified. Therefore, the High Court dismissed the appeal regarding this issue.

Issue 2: Deletion of penalty under section 271(1)(c) for disallowance related to duty draw back and dividend income from foreign companies:

In this case, the Assessing Officer levied a penalty under section 271(1)(c) on the respondent-assessee for additions made in relation to duty draw back and dividend income from foreign companies. However, the Commissioner of Income-tax (Appeals) deleted the penalty, which was further supported by the Tribunal. The Tribunal found that the amounts in question were voluntarily offered to tax by the assessee and not due to detection by the Assessing Officer. It was noted that similar income was assessed in a subsequent year without penalty imposition. Based on these facts, the Tribunal concluded that the penalty was not warranted in this scenario. As a result, the High Court dismissed the appeal on this issue as well.

In conclusion, the High Court upheld the decisions of the Tribunal regarding the deletion of penalties under section 271(1)(c) for both issues raised by the Revenue. The judgments were based on the voluntary disclosure of income by the assessee and not due to any concealment or inaccurate reporting. Hence, the appeal was dismissed with no order as to costs.