9911796707
TMI Blog2014 (12) TMI 1058X X X X Extracts X X X X X X X X Extracts X X X X ..... rticulars during the assessment proceedings; 2. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any grounds of appeal at any time before or during the hearing of this appeal." 2. The facts relating to the issue in dispute are that the assessee is a private limited company incorporated in 1996 under the Company Act, 1956. The company is engaged in the business of manufacturing/trading of various products including photocopiers, printers and cameras etc. together with providing of service support and maintenance services to its customers and software development. For the relevant assessment year, the appellant filed its original return of income on October 31, 2002 declaring a loss of Rs. 9,60,35,600/- and thereafter a revised return was filed on 29th March, 2004 declaring a loss of Rs. 8,96,79,220/-. The assessment for the subject assessment year u/s 143(3) of the Act was completed vide assessment order dated 18.03.2005 after making addition on account of Arm's length price amounting to Rs. 6,75,59,378/- and reducing the deduction u/s 10A of the Act as follows: S.No. Particulars Amount (Rs.) 1. Deduction u/a 10A claimed in the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered by the Hon'ble Supreme Court of India as well as the Hon'ble High Courts. He requested that the appeal filed by the Revenue may be dismissed. In support of his contentin he has also filed a paper book containing page 1- 458 in which he has attached various documentary evidence and the decision of Hon'ble Supreme Court of India, Hon'ble High Courts and the Delhi Tribunal. 4.1 We have heard the both parties and perused the relevant record available with us and the order passed by the Revenue Authorities specially the impugned order along with all documentary evidence filed by the ld. Counsel for the assessee. We are of the considered view that ld. First Appellate Authority has discussed in detail the relevant provision of law along with the various case laws as well as written submissions filed by the assessee in the impugned order. Ld. CIT(A) has finally concluded his finding at page 11 & 12 para 5-5.2. For the sake of convenience i.e. reproduced as under: 5. "I have carefully considered the submissions made by the ld. AR and have gone through the penalty order. It is observed that there is no default on the part of the appellant in disclosing complete facts p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst Appellate Authority and the facts of the present case, we are of the view that no penalty u/s 271(1)(c) of the Act can be justifiably be levied on the facts of the present assessee. The Revenue Authority has failed to establish that in the return of income the assessee has either shown as incorrect or inaccurate particulars of income. Merely because the AO did not agree with the submission made by the assessee, the same cannot be said to be furnished of inaccurate particulars of income for the purpose of levying penalty u/s 271(1)(c) of the Act. The disallowances of expenditure cannot result in automatic levy of penalty in dispute. If an assessee has been able to offer an explanation, which is not found by the Revenue Authority to be false, and assessee has been able to prove that such explanation is bonafide and that all the facts relating to the same have been disclosed by the assessee. The assessee shall be out of the clutches of Explanation1 to section 271(1)(c) of the IT Act and in such cases no penalty shall be imposed. These views has already been supported by the Hon'ble High Court of Delhi in various cases and as well as by the Hon'ble Supreme Court of India in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim was made, the same was bona fide as all the facts relating to such loss and material to the computation have been disclosed by him. Thus Explanation 1 to section 271(1)(c) is not attracted herein. If on the facts furnished by the assessee the view adopted is that such loss is not allowable without any finding that the explanation offered by the assessee is false, the assessee cannot be visited with penalty by invoking Explanation 1 to section 271(1)(c). Since there is no other allegation that the assessee has furnished inaccurate particulars of income except invoking Explanation 1 to section 271(1)(c) for levy of penalty, in our opinion, since Explanation 1 is not attracted, penalty u/s 271(1)(c) is to be cancelled. * 330 ITR 545 (Del) CIT vs. Mushashi Autoparts India (P) Ltd. "The assessee computed pre-operative expenses after deducting interest income. However, the AO held that interest could not be adjusted against pre-operative expenses as claimed by the assessee. Therefore, penalty was imposed upon assessee u/s 271(1)(c). The Commissioner (Appeals) as well as Tribunal deleted the penalty holding that merely because assessee's claim was not accepted by the AO, that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at loss. Therefore, excess claim of depreciation was not advantageous to the assessee. On the contrary, it was better for him to claim depreciation at the rate of 25 per cent in the relevant year resulting into higher written down value in the next year for claim of depreciation of a higher amount on higher written down value thereby reducing the tax liability. Therefore, the AO was not correct in holding that submitting inaccurate claim would amount to giving inaccurate particulars." [Emphasis supplied] * 343 ITR 434 (Del) CIT vs. Nokia India (P) Ltd. * 2 DTONLINE 312 (Del) CIT vs. Kiranjit Foils Ltd. "Assessee company had earned interest on investment made in short term deposits with bank prior to commencement of business - Issue as to whether said interest income was revenue receipt or capital receipt was debatable issue and there were two views possible on same - Assessee's claim was based on one of such possible views - However, assessee's claim was rejected and penalty was imposed upon it u/s 271(1)(c) - Tribunal held that making of such claim bona fide on basis of a possible view could not be treated as concealment of its income by assessee or furnishing inaccura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Hon'ble Supreme Court in the case of CIT vs. Suresh Chand Mittal, 251 ITR 09 , submitted that it has been held that where the department has not discharged its burden of proving concealment and has simply rested it's the penalty could not be imposed. Hence, for the reason given in the foregoing, we set aside the order of the CIT(A) and the AO and delete the penalty of Rs. 8,26,160/- "[Emphasis supplied]" 6. Keeping in view of the aforesaid discussion, we are of the view that no penalty u/s 271(1)(c) of the Act can be imposed in the case of present assessee because we found that the Revenue Authority has not disclosed any facts in its return of income. Even otherwise Revenue Authority has failed to establish that in the return of income assessee has either been shown as inaccurate or incorrect particulars of its income. We are of the view that merely because the expenditure claimed by the assessee has been disallowed by the Revenue Authority does not lead to an inference that it is a case of furnishing inaccurate particulars of income. The assessee has offered its bona fide explanation which was not proved false by the Revenue Authority. 7. Keeping in view of the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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