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TMI Blog2016 (2) TMI 378X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008-09. 2. Facts of the case in brief, as taken from the appeal file for the assessment year 2007-08, are that the assessee company is in the business of Bio-technology. It filed its return declaring 'nil income for the assessment year 2007-08 after claiming deduction under S.10A of Rs. 4,89,62,681 and unabsorbed depreciation of Rs. 12,70,402. Though case was initially processed under S.143(1) of the Act, subsequently, assessment was reopened by issuance of notice under S.148, and during the course of re-assessment proceedings, assessee's claim for deduction under S.10A of Rs. 4,89,62,681 was examined, and assessee was called upon to produce specifically the following a) Registration with Software Technology Parks of India (STPI) b) An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was unable to substantiate the claim made, by adducing the evidence as called for by the Assessing Officer, it chose to withdraw the claim for deduction under S.10A of the Act. In the circumstances, it was contended that there was no mala fide intention on the part of the assessee, and it immediately corrected its mistake as soon as it was informed of its bona fide mistake, and prayed for dropping of penalty proceedings. 4. The Assessing Officer was not convinced with the explanation of the assessee, and for the following reasons, summarized by the CIT(A) in the impugned order, imposed the penalty of Rs. 1,64,80,838, vide order dated 29.6.2011 passed under S.271(1)(c) of the Act. "a) The assessee did not withdraw the 10A claim on his o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) fails to prove that such explanation is bona fide; and (iii) fails to prove that all the facts relating to the same and material to the computation of income have been disclosed by him. h) The assessee failed to discharge its burden to prove that the act of claim of exemption u/s.10A was a bona fide one. Thus it is a clear case where assessee intentionally furnished inaccurate particulars of income. i) The Assessing Officer relied on the following decisions - a. CIT vs. India Sea Foods (1976) 105 ITR 708 (Ker) wherein it was held that - "falsehood in accounts can take either of the two forms; either en item of receipt may be suppressed fraudulently, or an item of expenditure may be falsely (or in exaggerated amount) claimed. Bot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed deduction of Rs. 5,65,54,922 under S.35(2AB). The said claim for deduction under S.35(2AB) was originally rejected by the Assessing Officer for want of Form No.3CL. The CIT(A), in separate proceedings u/s154, vide his order dated 1.1.2014 held that the Assessing Officer should allow deduction under S.35(2AB) at 150% of the amount determined by the prescribed authority. The Assessing Officer was also directed to examine the details of expenses incurred under S.35(1)and allow the same. Referring to his appellate order dated 1.1.2014 in the rectification proceedings under S.154, the CIT(A), in the impugned order, noted that if the assessee's claims under S.35(2AB) and S.35(1) are allowed, the returned income as well as assessed income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer under S.154, whereby she has directed the allowance of deductions under S.35(2AB) and S.35(1), held that if these deductions were allowed, the assessed income would become nil, and hence the quantum of penalty imposable for the years under appeal would also become 'nil'. Since the quantum of penalty imposable thus would be 'nil' in each of these years, the CIT(A) allowed the appeals of the assessee for statistical purposes. No material has been brought on record to controvert the finding of the CIT(A) that if the deductions under S.35(2AB) and S.35(1) are allowed for the years under appeal, the assessable income would be nil, and consequently, the penalty imposable would also be 'nil'. When there is no variation to the total income det ..... X X X X Extracts X X X X X X X X Extracts X X X X
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