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TMI Blog2015 (3) TMI 975X X X X Extracts X X X X X X X X Extracts X X X X ..... ntract, Technip was required to supply equipment to IOCL and undertake construction and installation services and related design and engineering services, the consideration for which was to be paid partly in Indian and partly in foreign currency. Revenues arising to "Technip" from onshore construction, onshore design and engineering, onshore supply, offshore construction and offshore design and engineering were offered to tax in India by Technip. The revenues from offshore supply of equipment were not considered to be chargeable to tax in India. The "Technip" had established a project office in India for execution of the aforesaid contract. In view of the fact that P.O constituted a permanent establishment of "Technip" in India under article 5 of the India-Italy treaty, "Technip" filed a return of income for the subject year on October 31, 2002 declaring business income of Rs. 7,34,39,734 which was adjusted with brought forward losses of the assessment year 2001-02 and nil income return was filed. In the assessment framed under section 134(3) of the Act, the Assessing Officer rejected the books of account of the assessee and the total income was assessed at Rs. 8,91,39,231 with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009, the learned Commissioner of Income-tax (Appeals) in compliance of the direction of the Tribunal has again confirmed the taxability of offshore supply of equipment. This action of the learned Commissioner of Income-tax (Appeals) was questioned by the assessee before the Tribunal in I.T.A. No. 434/Del/10 and the Tribunal vide its order dated September 30, 2010 has finally deleted the addition. After considering the order of the Tribunal, the final assessed income of the assessee has been worked out at Rs. 8,02,65,698 as against returned income of Rs. 7,34,39,734. 3. The penalty order under section 271(1)(c) of the Act was passed on March 29, 2007, after confirmation of the additions by the learned Commissioner of Income-tax (Appeals) in its first round on November 30, 2005. The Assessing Officer has levied penalty under section 271(1)(c) of the Act at Rs. 75,35,800 on all the additions made in the assessment order and upheld by the learned Commissioner of Income-tax (Appeals). The learned Commissioner of Income-tax (Appeals) vide his order dated February 18, 2010, has deleted this penalty of Rs. 75,35,800 against which the Revenue is in appeal before the Tribunal. 4. In suppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar Jain [2010] 325 ITR 378 (Chhattisgarh) 12. Asst. CIT v. Om Prakash Aggarwal I.T.A. No. 5589/Del/2010, ITAT, Delhi "E" Bench 13. CIT v. Bhoj Raj and Co. [2001] 247 ITR 696 (P&H) 14. CIT v. Reliance Petroproducts P. Ltd. [2010] 322 ITR 158 (SC) 15. CIT v. Tarapore and Co. [2008] 1 DTR 196 (Mad) 16 CIT v. S. Dhanabal [2009] 309 ITR 268 (Delhi) 17. ClT v. Vamchampigons and Agro Products [2006] 284 ITR 408 (Delhi) 18. CIT v. Amit Jain [2013] 351 ITR 74 (Delhi) 19. Global Green Company Ltd. v. Deputy CIT I.T.A. No. 1390/Del/2011, ITAT, Delhi Bench, New Delhi. have remained to be considered for penal action. 6. Having gone through the orders of the authorities below, we find that the Assessing Officer has levied penalty under section 271(1)(c) of the Act at Rs. 75,35,800, the additions made on account of : (i) Offshore supply of equipment (Rs. 16,27,231) ; (ii) Income from foreign exchange quantum gain (Rs. 72,46,302) ; (iii) Income from onshore supply and contract receipts (Rs. 4,46,53,300) ; and (iv) Income from fee for design and engineering under section 115A (Rs. 3,55,85,515). 7. So far as the penalty levied on the addition made on account of o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and other contract receipts has been estimated by the Assessing Officer after rejection of books of account under section 145 of the Act. The estimation of income in this regard has also been made on the basis of the disclosure made by the assessee. It is now a well-established proposition of law that penalty under section 271(1)(c) of the Act cannot be levied on an estimated income. One of such cited decisions is of the hon'ble Allahabad High Court in the case of CIT v. K. L. Mangal Sain [1977] 107 ITR 598 (All) wherein it has been held that merely because books of account were rejected and the income was assessed on estimate basis, it could not be held that the assessee was guilty of fraud or gross or wilful neglect for the purpose of levy of penalty under section 271(1)(c) of the Act. Similar view has been taken by the hon'ble Gauhati High Court in the case of CIT v. Chhaganlal Shankarlal [1975] 100 ITR 464 (Gauhati) wherein accounts maintained on regular basis on the basis which return was filed, was rejected and income was estimated. Respectfully following ratio laid down in these decisions on this issue, we are of the view that the learned Commissioner of Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the computation of his income were disclosed by the assessee, penalty under section 271(1)(c) is not leviable. Before us the learned authorised representative has also placed reliance on the decision of the hon'ble Supreme Court in the case of CIT v. Reliance Petroproducts P. Ltd. [2010] 322 ITR 158 (SC) and of the hon'ble Delhi High Court in the case of CIT v. Amit Jain [2013] 351 ITR 74 (Delhi). There is no dispute that penalty under section 271(1)(c) cannot be imposed where bona fide claim of the assessee is not accepted and a different view is taken by the Assessing Officer. It is also an established proposition of law that where an issue is debatable on which two views are possible, penalty cannot be levied under section 271(1)(c) of the Act wherein addition has been made by taking one of the possible views. In the present case we find that the assessee had credited the revenues arising on account of fees from design and engineering services in its profit and loss account and offered the income so earned to tax on the basis of the net profit as per the audited books of account. The complete break up of the Revenue arising to the assessee was furnished before the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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