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TMI Blog2016 (9) TMI 906X X X X Extracts X X X X X X X X Extracts X X X X ..... me assessee are directed against separate orders of the Commissioner of Income Tax(Appeals)-VIII, Ahmedabad ( CIT(A) in short) identically dated 18/01/2011 pertaining to Assessment Years (AYs) 2002-03, 2004-05 1995-96. 2. At the outset, ld.AR submitted that all the three appeals are with respect to levy of penalty u/s.271(1)(c) of the Act. He submitted that as far as penalty for AY 1995-96 is concerned, the penalty u/s.271(1)(c) of the Act has been levied on the various disallowances and denial of claim of deduction u/s.80IB of the Act. He further submitted that as far as appeals for assessment years 2002-03 2004-05 are concerned, penalty has been levied on the disallowance of deduction made u/s.80HHC and 80IB of the Act and therefore the submissions for both the years would be common. 3. First, we take up the Assessee s appeal in ITA No.1060/Ahd/2011 for AY 1995-96. 3.1. The relevant facts as culled out from the materials on record are as under:- 3.2. Assessee is a company stated to be engaged in the business of manufacturing of electric furnaces. Assessee filed its return of income for AY 1995-96 on 30/11/1995 declaring total income of ₹ 91,98,630/-. The ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim of deduction u/s.80IA of ₹ 5,06,969/-. 3.4. Before us, Ld.AR reiterated the submissions made before AO and ld.CIT(A) and further submitted that as far as the addition on account of disallowance of bad debts is concerned, against the quantum addition the assessee had carried the matter before the Tribunal and the Hon ble Tribunal restored the issue to ld.CIT(A). Pursuant to the direction of the Tribunal, the ld.CIT(A) passed order on 24/02/2014 u/s.254 of the Act (in Appeal No. CIT(A) VIII/ITO.Wd.4(1)/180/254/2010-11) wherein the addition of bad debts was deleted. He placed on record the copy of the aforesaid order and pointed out to the relevant findings of the ld.CIT(A). He therefore submitted that since the addition itself has been deleted, no penalty for concealment of income would survive on the disallowance of bad debts. With respect to the disallowance of depreciation and excess claim of deduction u/s.80IA of the Act, he submitted that on identical facts, AO had levied penalty u/s.271(1)(c) of the Act in the case of assessee for AY 2003-04. The Coordinate Bench of Tribunal in ITA No.972/Ahd/2009 had deleted the penalty by order dated 29/07/2011. He placed on re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 271(1)(c), as per which if in relation to any addition in the assessment, the assessee offers no explanation or offers explanation which is found to be false or is not able to substitute the explanation and is also not able to prove that the explanation is bonafide, the addition made would amount to concealment of particulars, of income. It is well settled that the parameters of judging the justification for addition made in the assessment case of the assessee is different from the penalty imposed on account of concealment of income or filing inaccurate particulars of income and that certain disallowance/addition could legally be made in the assessment proceedings on the preponderance of probabilities but no penalty could be imposed u/s. 271(1)(c) of the Act on the preponderance of probabilities and Revenue has to prove that the claim of expenses by the assessee was not genuine or was inflated to reduce its tax liability. Further merely because additions have confirmed in appeal or no appeal has been filed by assessee against additions made, it cannot be the sole ground for coming to the conclusion that assessee has concealed any income. Before us, l.dAR has given the reasons a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal No.CIT(A)-VIII/ITO-4(1)/013/09-10) upheld the penalty by holding as under:- 2.2 I have carefully considered the submission of the Ld. Counsel as well as the facts of the cast. The appellant had raised three grounds of appeal challenging the levy of penalty on various grounds. However, the Ld. Counsel has not furnished groundwise submission therefore, the grounds of appeal are decided simultaneously, I have carefully gone through the decisions relied upon by the Ld. Counsel. It was noticed on examination that except a few, all other decisions are not relevant to the facts of the case. The Ld. Counsel has not established as to how those decisions are relevant and how the same are applicable on the facts of the case, The Hon'ble Amritsar Tribunal has rightly observed in the case of Shree Balaji Alloys vs. ITO [2010] 127 TTJ 129 (Asr ) that it Is crucial to point out that the Judicial precedents are to torn applied with care and caution and not mechanically, as each case depends on its own facts and a close similarity between one case and another is not enough because even a single significant detail may alter the entire aspect. It is cardinal principle in applying judici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed which shows that the finding of the Assessing Officer was confirmed by the Hon'ble Tribunal. 2.5 I do not agree with the contention of the Id. Counsel that the claims of deduction made u/s 80HHC and 80IB are bonafide and genuine claims made by the Appellant. If the claim of the appellant was genuine and bonafide then what was the necessity not to press all the grounds of appeal before the Hon'ble Ahmedabad Tribunal except the grounds relating to service charges and scrap sales. Even the issue of disallowance of aforesaid deductions on service Income was held against the appellant in earlier years and to also denied for the year under consideration. The appellant cannot derive support from the decision of the CIT(A) for the A.Y. 2003-04 wherein penalty was deleted. The CIT(A) vide para-4.4 of his appellate order dated 31.12.2008 had deleted the penalty on the issues which have been set aside by the Tribunal. I have also deleted the penalty for the A.Y. 2004- 05 on the issue of scrap sales vide para-2.4 of the said appellate order for the A.Y. 2004-05 as set aside by the Tribunal. The penalty on the disallowance of deduction u/s 80HHC and u/s. 80-IB on service inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition of deduction u/s 80-IB of the Act. The deduction is available only if the profit and gains are derived from the industrial undertaking. The Hon'ble Supreme Court by applying the ratio laid down by the Hon'ble Supreme Court in the cases of Cambay Electric Supply Industrial Co, Ltd, vs. CIT 113 ITR 84 (SC), CIT vs. Raja Bahadur Kamakhaya Narayan Singh 16 ITR 325 (SC) and Mrs. Bacha F. Guzdar vs. CIT 27 ITR 1 (SC) had held in the case of Pandian Chemicals Ltd. vs. CIT 262 ITR 278 (SC) that The word 'derived from' in sec. 80HH must be understood as something which has direct or immediate nexus with the appellant's industrial undertaking. Although electricity may be required for purposes of the industrial undertaking, the deposit required for its supply is a step removed from the business of the industrial undertaking. The derivation of profits on the deposit made with Electricity Board cannot be said to flow directly from the industrial undertaking Itself. Thus, the law was well settled as to on which income or profit and gains, the deduction u/s 80HHC and 80-IB of the Act is allowable. The appellant was well aware of the fact at the time of filing its re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income. He further submitted that merely because the claim of the assessee has not been accepted, the assessee cannot be penalized. The ld.Sr.DR on the other hand supported the orders of lower authorities. 6.4. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. The issue in the present case is with respect to levy of penalty u/s.271(1)(c) of the Act on additions with respect to deduction u/s.80HHC 80IA of the Act. Ld.Sr.DR has not controverted the submissions made by the ld.AR. Further, there is nothing on record to demonstrate that assessee had filed inaccurate particulars of income or had concealed the particulars of income. We also get support from the judgement of the Hon ble Supreme Court in the case of CIT vs. Reliance Petroproducts Pvt.Ltd. reported at (2010) 322 ITR 158 (SC), wherein the Hon ble Apex Court has held that a mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to the inaccurate particulars. Considering the aforesaid facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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