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TMI Blog2017 (2) TMI 550X X X X Extracts X X X X X X X X Extracts X X X X ..... 41 corrodes.A revised return was filed on 22/06/205,declaring Loss at Rs. 4.12 crores.The Assessing Officer(AO)completed the assessment u/s. 143 (3) on 22/12/2006 determining the income of the assessee at Rs.(-) 1.36 crores. While computing the assessment, the AO held that claim of the assessee with regard to project development expenses to the tune of Rs. 2.21 crores was not admissible. He disallowed and amount of Rs. 2.04 crores.The matter travelled up to the Tribunal.Vide its order dated 13/08/2010 (ITA/3173/Mumbai/2008,AY.2004-05),the Tribunal confirmed the order of the First Appellate Authority (FAA) and dismissed the appeal filed by the assessee. 2. The AO initiated penalty proceedings as per the provisions of section 271(1)(c) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missions and perused the material before us. We find that while deciding the quantum appeal the Tribunal had dismissed the Ground raised by the assessee with regard to project development expenses, that the Hon'ble Jurisdictional High Court has admitted a substantial question of law vide its order dated 07/12/2011 and it reads as under: "Whether on the facts and in the circumstances of the case and in law, the Tribunal in holding that the amount of Rs. 2,04,30,000/-being business development expenses was not allowable." The levy of penalty u/s. 271(1)(c),after admission of a substantial question of law by the Hon'ble High Court,has been dealt in the case of Aditya Birla Nuvo Ltd. (supra)as follow: "2. Brief facts of the case are that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claiming full normal depreciation on the boiler. Hence, in given circumstances though the disallowance on the part of deprecation claimed by appellant is justified, but the penal action for concealment of income is held to be not justified. Accordingly, the penalty imposed for concealment u/s. 271(1)(c) is deleted." 4. Aggrieved by the order of CIT(A), the Revenue has filed the present appeal and the assessee filed C.O. We have heard ld. DR for Revenue and AR for assessee and perused the material available on record. Ld. DR for Revenue argued that assessee was conscious since filing of return of income that depreciation on the boiler is not allowable and concealed the material date when the same was put to use. Ld. DR further argued that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. The Hon'ble Bombay High Court while considering the almost identical ratio(grounds) held as under: "Having heard Mr Ahuja, learned counsel appearing on behalf of the Appellant, we find that this Appeal cannot be entertained as it does not raise any substantial question of law. The imposition of penalty was found not to be justified and the Appeal was allowed. As a proof that the penalty was debatable and arguable issue, the Tribunal referred to the order on Assessee's Appeal in Quantum proceedings and the substantial questions of law which have been framed therein. We have also perused that order dated 27th September 2010 admitting Income Tax Appeal No.2368 of 2009. In our view, there was no case made out for imposition of penalty and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not justified when debatable and arguable issue on substantial question of law has been admitted by the Hon'ble High Court. Thus, the appeal of Revenue is dismissed."
4.1.Considering the above and respectfully following the judgments of Nayan Builders and Developers and Liquid Investment and Trading Company(supra),we hold that after admission of substantial question of law by the Hon'ble Bombay High Court the issue has become debatable and that penalty u/s. 271(1)(c) cannot be imposed in such cases.Reversing the order of the FAA, we decide effective Ground of appeal in favour of the assessee.
As a result, appeal filed by the assessee stands allowed.
Order pronounced in the open court on 10th February, 2017. X X X X Extracts X X X X X X X X Extracts X X X X
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