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TMI Blog2019 (6) TMI 592X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee despite giving the opportunity has failed to offer any explanation. On the contrary the AO himself in para 2 of the penalty order dated 29.08.2016 duly recorded that the assessee filed its reply dated 09.08.2016 received in his office on 24.08.2016. The contents of the reply is also refereed by him in the order itself. Therefore, no infirmity or illegality in the order passed by ld CIT(A), which we affirm. Assessee has not filed cross objection to support the order of ld CIT(A) on merit, yet argued that the assessee has good case on merit and relied on the decision of CIT Vs Amoli Organics P. Ltd [ 2014 (4) TMI 1245 - GUJARAT HIGH COURT] that mere denial of claim under section 35(2AB) would not lead to levy of penalty u/s 271(1)(c). Therefore, in view of the facts that the submissions of the ld AR for the assessee are purely legal in nature, thus, needs consideration. The Hon ble High Court held that in the scrutiny assessment u/s 143(3) the assessee withdrew such claim since it failed in such challenged before CIT(A) by them. If the expenses incurred genuinely had been claimed in the return of income, rejecting the claim may not result in to penalty proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reply, the assessee stated that they claimed deduction under section 35(2AB) of ₹ 14,84,39,194/- (200% of ₹ 7,42,19,597/-) on the basis of audited account. The account was duly certified by Chartered Accountant (C.A). The assessee filed application before the Department of Scientific and Industrial Research (DSIR) authorities/appropriate authorities. The appropriate authority approved the claim to the extent of ₹ 2,38,51,000/- vide approval dated 07.05.2014. During the assessment, the assessee revised the computation of income vide application dated 19.01.2016 and revised deduction under section 35(2AB) of ₹ 4,77,02,000/-. The revised computation was accepted by Assessing Officer. The assessee further stated that no inaccurate particulars were furnished at the time of filing return of income. The claim was made by assessee on the facts available at the time and was bonafide. 4. The reply of assessee was not accepted by Assessing Officer. The Assessing Officer concluded that the assessee should have made his claim of deduction under section 35(2AB) after proper approval from competent authority (DSIR, New Delhi). It was only during the scrutiny assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rue and correct. Not only that said claim was also mentioned in the tax Audit report in Form 3CD as required under section 44AD of the Act which was uploaded along with return filed. The only reason for disallowance was Form 3CD issued by the DSIR which was received on 13 May 2014 i.e. around after six months after filing of return of income. It is settled position that where no information given in the return was found to be incorrect or inaccurate no penalty under section 271(1)(c) could be levied since there is neither concealment of particular is of income nor furnishing inaccurate particulars of income in such cases. In support of his submission the learned AR relied upon the decision of Hon'ble Supreme Court in CIT versus Reliance Petroproducts Ltd (322 ITR 158 SC). 8. In fourth alternative submission the learned AR of the assessee submits that in the present case, it is evident that penalty has been levied by the assessing officer without any application of mind whatsoever. It was it was not clear as to on what charge the assessing officer has initiated penalty and on what charge he has levied the penalty. The assessing officer invoked the Explanation-1 of section 271(1) wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4rws 271(1) concluded that the assessing officer not bothered to fill the blanks with the appropriate limbs of section 271(1) (c) and that he has not applied his mind to the facts of which reason the penalty notice was issued and held that penalty is not sustainable. The ld CIT(A) while deleting the penalty relied on the decision of Karnataka High Court in Manjunatha Cotton & Ginning Factory (359 ITR 566) and the case law in SSA'S Emerald Meadows [2016] 73 taxmann.com 248 (SC). No contrary facts or law is brought to our notice. 11. The Hon'ble Bombay High Court in case of Samson Perinchery (supra) while following the decision of Hon'ble Karnataka High Court in CIT vs. Manjunatha Cotton & Ginning Factory (359 ITR 565) held that it is necessary for the AO to record its satisfaction on the ground of which penalty has been initiated, it cannot be on a fresh ground on which assessee has no notice. Admittedly while issuing the notice, the AO has not specified by not striking out the irrelevant portion in the notice. The AO levied the penalty on concealment of income. The AO has not recorded its satisfaction that act of the assessee was deliberate and intentional. From the overall fact a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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