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TMI Blog2010 (2) TMI 868X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee is directed against the order dated 14.1.2009 passed by the ld. CITA) for the Assessment Year 2003-04 sustaining penalty of Rs.4,40,750/- imposed by the Assessing Officer u/s. 271(1)(c) of the income tax Act, 1961(the Act). 2. Briefly stated facts of the case are that the assessee company is in the business of manufacturing activity of jewellery and export of the same. It filed return declaring nil income after claiming deduction u/s.10A of the Act amounting to Rs.3,42,92,692/-. However, the Assessing Officer while partly disallowing the deduction u/s.10A on interest income, sale of residue and miscellaneous income and gain on account of exchange rate fluctuation, restricted the deduction u/s.10A Rs.3,21,11,123/-. The Assessing Officer after making some other disallowances, completed the assessment at an income of Rs.59,91,870/- vide order dated 24.3.2006 passed u/s.143(3) of the Act. On appeal, the ld. CIT(A) allowed part relief to the assessee in allowing deduction u/s.10A Rs.3,30,93,368/-. While making the assessment the Assessing Officer also initiated penalty proceeding u/s.271(1)(c) of the Act. Accordingly the assessee was asked to show cause as to why pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e from other sources and netting be allowed against interest payment and thus deduction u/s.10A be allowed as claimed by the appellant." 21. After hearing both sides, we find that this ground is identical to the ground of appeal No.1 raised by the assessee in ITA No.9042/Mum/2004. We have already decided the issue and the ground raised by the assessee has been restored to the file of the Assessing Officer for fresh adjudication. Following the same ratio, this ground raised by the assessee is also restored to the file of the Assessing Officer for fresh adjudication in the light of the directions given therein. This ground raised by the assessee is accordingly allowed for statistical purposes. 22. Ground of appeal no.2(a) raised by the assessee reads as under:- "2. (a) Sale proceeds of Rs.4,05,130/- from residue being dust collected containing precious metals like gold etc. be considered as income from business and thus part of total turnover instead of income from other sources and deduction under section 10A be allowed thereon." 23. The facts of the case in brief are that the Assessing Officer during the course of assessment proceedings observed that the assessee in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of deduction u/s.10A, the assessee has to fulfil the conditions of section 10A i.e. export of such things or articles. It is not known whether such dust containing precious metal were sold in local market or exported. We therefore deem it proper to restore the issue to the file of the Assessing Officer to verify as to whether the assessee fulfils the conditions prescribed in section 10A and then decide the issue as per law. We hold the direct accordingly. This ground by the assessee is accordingly allowed for statistical purposes. 27. Ground No.2(b) raised by the assessee reads as under:- 2(b) Gain of Rs.5,75,958/- on account of cancellation of foreign exchange contract in the course of business treated as income from other sources, be treated as income from business and deduction u/s.10A be allowed thereon." 28. The facts of the case in brief are that miscellaneous income of Rs.9,18,088/- contained an amount of Rs.5,75,958/- which was received on account of cancellation of foreign exchange contract. The Assessing Officer treated the same as 'income from other sources' and did not allow benefit of deduction under section 10A of the I.T.Act. In appeal, the CIT(A) upheld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0A of the Act. The difference in allowing the deduction u/s.10A is on account of difference of opinion and the matter is still pending before the Assessing Officer and, hence, there is no concealment on the part of the assessee. The Hon'ble High Court and the Tribunal in many cases have held that on account of difference of opinion the penalty is not leviable. The reliance was also placed on the following decisions; 1. CIT vs. Haryana Warehousing Corporation (2009) 25 DTR 194 (PandH); 2. Kanbay Software India (P) Ltd. vs. Dy.CIT (2009)31 SOT 153(Pune); 3. Twin Star Jupiter Co-operative Hsg. Soc. Ltd. vs. ITO (2009) 31 SOT 474 (Mum.) and 4. ACIT vs. Mahindra Shubhlab Services Ltd. (2009) 31 SOT 361(Mum.) She, therefore, submits that the penalty imposed by the Assessing Officer and sustained by the CIT(A) be deleted. 5. On the other hand the ld. DR while relying on the order of the Assessing Officer, the order of the CIT(A) also relied on the decision cited in the order of the Assessing Officer namely CIT vs. India Sea Foods (1976)105 ITR 708(Ker.), Nagin Chand Shiv Sahai vs. CIT 61 ITR 534, CIT vs. Gates Foam and Rubber Company (1973) 91 ITR 467(Ker.), and Un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen the facts are clearly disclosed in the return of income, penalty cannot be levied and merely because an amount is not allowed or taxed to income, it cannot be said that the assessee had filed inaccurate particulars or concealed any income chargeable to tax. Further, conscious concealment is necessary. Even if some deduction or benefit is claimed by the assessee wrongly but bonafide and no malafide can be attributed, the penalty would not be levied. 8. In CIT vs. India Sea Foods (supra), the facts of the case are that the assessee declared a net loss of Rs.3,29,304/- in the return filed by it. After discussion with the Department and under the settlement the partners of the firm agreed that a sum of Rs.7.00 lacs may be added as income derived from them from undisclosed sources subject to spread over between the Assessment Years 1964-65 to 1968-69 in proportionate to the turnover. The assessee also agreed under that settlement that minimum penalty prescribed under the Act may be levied against it for all those years. Pursuant to the said settlement the Assessing Officer finalised the assessment after adding a proportionate amount of Rs.2,84,727/- and disallowance of certain e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .10A of the Act and the issue under consideration is penalty imposed u/s.271(1)(c) of the IT Act, 1961 and not under the old Act, therefore the decision relied on by the ld. DR is distinguishable and not applicable to the facts of the present case. 10. In CIT vs. Gates Foam and Rubber Company (supra), it has been held (page 468 headnote) that the placing of the bogus debit as genuine constituted furnishing of inaccurate particulars of income. It had been proved that the agent-firm was a bogus concern set up for the purpose of diverting a large portion of the income of the assessee. The presumption provided for in section 271(1)(c) applied to the facts of the case and penalty had to be imposed. Whereas in the case before us it is not the case of the Revenue that the assessee is a bogus concern or the claim of deduction u/s.10A made by assessee was found to be false or untrue or the assessee is not entitled to such deduction, therefore, the decision relied on by the ld. DR is distinguishable and not applicable to the facts of the present case. 11. In CIT vs. Haryana Warehousing Corporation (2009) 25 DTR 194 (PandH), relied on by the ld. Counsel for the assessee, it has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1)(c). On appeal against penalty order, the Commissioner(Appeals) cancelled the penalty in respect of only one item and confirmed the penalty in respect of remaining two items. It has been held that when the assessee had filed all the particulars of income, the correct assessment and calculation of total income had to be done by the Assessing Officer. If in such process the Assessing Officer found different total income to be assessed, than the income offered by the assessee, in such case it was not automatically a case where penalty under section 271(1)(c) was leviable. 14. In ACIT vs. Mahindra Shubhlab Services Ltd. (2009) 31 SOT 361(Mum.), relied on by the ld. Counsel for the assessee, the facts of the case are that the assessee claimed expenditures on account of project feasibility report and on account of market research. The Assessing Officer while making assessment, allowed 1/10th of such expenses by invoking section 35D as those expenses were allowable in 10 years. Thereafter, the Assessing Officer levied penalty on both of the said items on ground that the assessee had filed inaccurate particulars of its income and concealed the income. The Commissioner (Appeals) canc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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