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TMI Blog2014 (9) TMI 761X X X X Extracts X X X X X X X X Extracts X X X X ..... nged such claim under the provision of Section 35AB and such change during the course of assessment proceedings is permissible under the law - so far as levy of penalty for concealment of the income u/s 271(1)(c) is concerned, the Tribunal has noted that in terms of provisions of Explanation 1 to Section 271(1)(c) of the Act, if an explanation comes forth from the assessee, or if any explanation given is found to be false, or is not able to sustain the explanation and is also not able to prove that the explanation is bona fide, the addition made tantamount to concealment of particular of income - the penalty proceedings are separate from those of the assessment proceedings and confirmation of additions may not be the sole ground for confirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer who framed assessment under Section 143 (3) of the Act on 28th February 2001 determining the total income at ₹ 63,88,440/-, after making disallowance of technical knowhow expenditure under Section 35AB of the Act of ₹ 40,62,344/-. Respondent assessee had incurred total expenditure of ₹ 48,74,812/- for acquiring the user rights of knowhow from Latin American consultants of Denvar, Colorado, USA and such claim was permitted as allowable only 1/6th of the total expenditure. In such assessment order, satisfaction was recorded with regard to initiation of penalty proceedings under Section 271 [1](c) of the Act, and accordingly, a notice under section 271[1](c) of the Act was issued to the assessee on 28th Februar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ho has submitted before us that having now found that technical knowhow expenditure could not have been requested for under section 37 of the Act, which is meant for general expenditure and there being a specific provision for claiming technical knowhow fees under section 35AB of the Act, the assessee had intentionally asked for it and unless questioned during the course of scrutiny assessment, it had maintained such a claim. She, therefore, had urged that both the Assessing Officer and the CIT [A] were right in holding in favour of the Revenue as far as the penalty proceedings are concerned and the Tribunal has committed an error in setting aside both these orders and thereby giving rise to the question of law. On having considered the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Explanation 1 to Section 271 [1](c) of the Act, if an explanation comes forth from the assessee, or if any explanation given is found to be false, or is not able to sustain the explanation and is also not able to prove that the explanation is bona fide, the addition made tantamount to concealment of particular of income. For having found, on the basis of settled legal position and various judicial pronouncements that the penalty proceedings are separate from those of the assessment proceedings and confirmation of additions may not be the sole ground for confirming the penalty, the Tribunal held that all these details were already before the Assessing Officer so also before the other authorities, and therefore, it would not be plausible to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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