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TMI Blog2012 (9) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the ground and as an abundant precaution, also raised additional grounds in clarification of the original grounds incorporating one of the contention that the penalty proceedings were initiated on one ground, whereas the penalty was levied on another reason. All the grounds raised are with reference to the levy of penalty under section 271(1)(c). Therefore, the this issue considered in these two appeals. 2. The relevant facts of the case are that assessee had filed returns of income in respective years declaring nil income after claiming deduction under section 80HHC. The claim in assessment year 2001-02 was to the extent of Rs.24,47,393/- under section 80HHC and Rs.9,45,131/- in assessment year 2002-03. Assessee inter alia worked ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to assessee. Assessee did not prefer appeal on the above issue, even though the matter was carried in appeal on other issues. AO finalized the penalty proceedings on the disallowance of section 80HHC deduction holding that assessee has deliberately and consciously attempted to conceal the true particulars of its income and consequently evaded the tax thereof. He accordingly levied the penalty of Rs.9,67,944/- in AY 2001-02 and Rs..3,37,412/- in AY 2002- 03. The learned CIT (A) confirmed the same agreeing with the orders of AO. 3. The learned Counsel made elaborate arguments mainly on the reasons that the CIT (A) confirmation of invoking the Explanation to section 271(1)(c) was not correct as assessee has given a bonafide explanation whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed was in the nature of assortment and service charges but termed as commission as a trade practice and not commission for doing any trading or business as an agent. The learned Counsel also referred to the decision of the Hon'ble Bombay High Court in the case CIT v. Bangalore Clothing Co. (2003) 260 ITR 371 to submit that it is the duty of AO to ascertain whether the income is an operational income or non-operational income while working out the deduction under section 80HHC. He also relied on the decision of the ITAT in the case of Model Footwear (P) Ltd vs. Income Tax Officer, 319 ITR (AT) 51 (Del.) wherein on similar facts the ITAT deleted the penalty on the reason that non deduction of 90% thereof from the net profits of the business i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty proceedings as the C.A. who was dealing assessee's case migrated to London and at the relevant point of time there was no authorized person to represent assessee and accordingly no explanation was furnished. It was also further submitted that assessee had explained the nature of income and why the claim was made at the time of filing the return before the CIT (A), but these were not considered by the CIT (A). 5. The learned DR however, submitted that assessee has not challenged the said disallowance made in the assessment and there was no explanation from assessee why the export commission was claimed. Except a passing reference to the assortment charges, no details were filed before AO and the penalty was validly levied as the clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... point of time in view of the judgment of the Bangalore Clothing (Supra), the claim of inclusion of the above said amount as operational income cannot be considered as malafide claim. Further AO without examining any details has only modified the computation. For example the claim made by assessee in assessment year 2000-01 was as under:- 1 Total turnover of the business Rs.7,66,104 2 Total export turnover Rs.7,37,92,023 3 Total profits of the business Rs.19,95,654 4 Export turnover in respect of trading goods Rs.61,48,371 5 Direct cost of trading goods exported Rs.49,40,871 6 Indirect cost of trading goods exported Rs.9,24,910 7 Total 5 + 6 Rs.58,65,781 8 Profits from export of trading goods (4 minus 7) Rs..2,82,590 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim cannot be considered as a malafide claim. As can be seen from the working AO simply excluded the amount from computation of profit from manufacturing/ trading and included the same as other income of business. It was already noted that AO did not make any enquiry before treating as such. 7. Just because assessee has not contested the working made by AO it does not automatically lead to penalty under section 271(1)(c). Each and every addition made in the assessment cannot automatically lead to levy of penalty for concealment of income or furnishing inaccurate particulars of income. It is also a settled legal position that the penalty proceedings are different from assessment proceedings and the findings given in the assessment though ..... X X X X Extracts X X X X X X X X Extracts X X X X
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