2019 (2) TMI 1373 - AT - Income Tax

Penalty levied u/s. 271(1)(c) - deduction u/s 80 IA which resulted in allowance of double deduction on same profit - HELD THAT - The assessee lost the appeal before the First Appellate Authority, penalty proceedings were separately initiated on the ground that the assessee claimed deduction u/s 80 IA of the Act and simultaneously claimed u/s 80 HHC of the Act without reducing the profit to the extent claimed deduction u/s 80IA of the Act which resulted in allowance of double deduction on same profit. The Assessing Officer was convinced that the assessee has concealed particulars of income, therefore, invoking explanation- 1 to u/s 271 (1) (c) of the Act penalty was levied. The assessee carried the matter before the CIT(A) and strongly contended that it has not claimed simultaneous deduction intentionally and therefore, it is not a fit case for levy of penalty. Strong reliance was placed on the judgment in the case of Reliance Petro Projects Private Limited 2010 (3) TMI 80 - SUPREME COURT . After considering the facts and the submission and drawing support from various judicial decision the CIT(A) deleted the penalty so levied. The claim of the assessee is a highly debatable issue as there are conflicting decisions of High Courts and the Tribunal. Though the jurisdictional High Court of Delhi is against the assessee but that is relevant for quantum proceedings. Findings in quantum proceedings may be relevant but are not conclusive or determinative of the penalty proceedings. - Decided against revenue

Summary

Issues:
Appeal against deletion of penalty u/s. 271 (1) (c) of the Act amounting to ? 85.31 lacs for A. Y. 2001-02.

Analysis:
The revenue appealed against the CIT(A)'s order deleting the penalty under section 271 (1) (c) of the Act. The revenue contended that the assessee had intentionally claimed simultaneous deductions u/s 80 IA and 80 HHC of the Act, resulting in the levy of penalty. The revenue relied on the judgment of the Delhi High Court in the case of Zoom Communications Private Limited. However, the assessee argued that it did not claim deductions intentionally, citing the Supreme Court judgment in the case of Reliance Petro Projects Private Limited. The CIT(A) deleted the penalty, considering the conflicting decisions of various High Courts and Tribunals on the issue of simultaneous deduction claims.

During the scrutiny assessment, the assessee filed a revised return, recalculating deductions u/s 80 IA, 80 HHC, and 80 JJAA of the Act. The Assessing Officer reworked the deductions, reducing the simultaneous claim of deduction u/s 80 IA. The penalty was levied on the grounds of concealing income particulars. The CIT(A) found the issue of simultaneous deductions to be debatable, citing conflicting decisions of various courts and tribunals. The CIT(A) referred to judgments supporting the assessee's case, emphasizing the debatable nature of the issue and the non-leviability of penalty on debatable matters.

The CIT(A) noted conflicting decisions on simultaneous deduction claims u/s 80 HHC and 80 IA, stating that the issue was debatable and involved substantial questions of law. The CIT(A) referred to judgments from different High Courts and the ITAT, emphasizing the debatable nature of the issue. The CIT(A) concluded that penalty u/s 271(1)(c) was not leviable due to the highly debatable nature of the claim. The ITAT upheld the CIT(A)'s decision, dismissing the revenue's appeal and emphasizing the lack of reason to interfere with the CIT(A)'s findings.

In conclusion, the ITAT dismissed the revenue's appeal against the deletion of the penalty under section 271 (1) (c) of the Act. The ITAT upheld the CIT(A)'s decision, considering the debatable nature of the simultaneous deduction claims u/s 80 HHC and 80 IA, and the conflicting decisions of various courts and tribunals on the issue.