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TMI Blog2015 (2) TMI 994X X X X Extracts X X X X X X X X Extracts X X X X ..... of disallowance of capital expenditure of Research and Development of Rs. 48,76,810/and essentially the imposition of penalty under section 271(1)(c) after such disallowance. 4] Mr. Sanjiv Shah, learned counsel, appearing on behalf of the Assessee in support of this Appeal submits that it raises substantial questions of law. He submits that the substantial question of law is; whether the Tribunal was justified in upholding the imposition of penalty pertaining to addition of Research and Development expenditure? In the submission of the counsel, none of the ingredients of section 271(1)(c) read with explanation thereto can be said to be attracted. This was not a case, according to him of the expenditure not being incurred at all. The expend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The penalty at best could have been sustained to this figure. 6] Mr. Shah has relied upon section 271(1)(c) of the Income Tax Act, 1961. He has relied upon the judgment of the Hon'ble Supreme Court in the case of Commissioner of Income Tax V/s. Reliance Petro reported in 322 ITR 158. Mr. Shah has relied upon the judgment in the case of Price Waterhouse V/s. Commissioner of Income Tax reported in 348 ITR 306 rendered by the Hon'ble Supreme Court and a Division Bench judgment of the Hon'ble Delhi High Court rendered in the case of Additional Commissioner of Income Tax V/s. Jay Engineering reported in 113 ITR 389. 7] On the other hand, Mr. Chhotaray appearing on behalf of the Revenue submits that the Appeal does not raise any s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and copies of all the relevant orders and other material annexed to the same. 9] The Tribunal had before it the order passed by the First Appellate Authority on 31st May, 2010. That order, to the extent, it imposes penalty on disallowance of capital expenditure on Research and Development has been upheld by the Tribunal. True, it is that the Tribunal has deleted the penalty imposed in relation to other claims or additions. Further, in Quantum Proceedings the Tribunal has partly allowed ground No.4 and directed the Assessing Officer to allow the claim of the Assessee on account of claim of Capital Expenditure to the extent of Rs. 7,70,190/( see the order dated 27th August, 2010 in Income Tax Appeal No.1271/Mum/2007). However, the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee along with the statement of Profit and Loss Account and Balance Sheets a deduction was claimed. That was disallowed by the Income Tax Officer. However, the First Appellate Authority and the Tribunal allowed it. The Tribunal, therefore, was asked to refer the two questions of law for opinion of the Delhi High Court. 10] In relation to point No.1, the Delhi High Court concluded that the detailed information as to expenses which were claimed as deductions could not be provided as the books for the accounting years were destroyed by fire. It is in these circumstances that the Tribunal and equally the Delhi High Court permitted the Assessee to rely on other materials. Thus, other materials included the auditors report, the extract thereof an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um Proceedings and Penalty Proceeding. Equally the findings of the Commissioner of Income Tax (Appeals) that before him as well such opportunity was given but not availed of by the Assessee. The Tribunal instead of denying any request firstly gave an opportunity to the Assessee to once again produce the materials. Secondly, it interfered with the orders partially by referring to the three bills which were produced. Thus, out of 9 items, the bills or supporting documents in relation to the 6 items have not been produced. The Tribunal concluded that the penalty should not be worked out or computed on the sum quantified and upheld by the Assessing Officer and the Commissioner of Income Tax (Appeals) but reduced it to Rs. 39,76,739/. The penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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