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TMI Blog2019 (8) TMI 501X X X X Extracts X X X X X X X X Extracts X X X X ..... sequence for every addition to returned income. Merely because an addition is made to the income declared by the assessee, penalty u/s.271(1)(c) could not be imposed. Raising a bona fide legal claim in the return of income, even if it is ultimately found to be legally not acceptable, could not amount to concealing particulars of income or furnishing of inaccurate particulars of income. The assessee could not be saddled with penal consequences merely because a bona fide legal claim was made in the return of income and the same has not been accepted by the tax authorities or appellate authorities so far. Thus, the case of assessee could not be said to be a case of 'concealing particulars of income' or 'furnishing of inaccurate particulars of income' as contemplated under section 271(1)(c) In this case, all the material facts relevant to the computation of total income was duly furnished by the assessee and no deficiency in furnishing of such facts was pointed out either by the A.O. or by the ld. CIT(A). Deeming fiction of Explanation 1 to Section 271(1)(c) was not applicable to the assessee's case and merely on account of disallowance of certain claim, penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions. As per the ld AR the provisions of Section 80AC are directory in nature and not mandatory. Therefore, a substantial claim or benefit to the company should not be denied on the ground that the provisions of Section 80AC, 80IA(7) or other similar sections which are procedural and directory in nature, are not met with due to genuine reasons beyond the control of the company. For this purpose, reliance was placed on the decision in the case of CIT Vs M/s Unitech Ltd. in ITA No. 239 of 2015 (Delhi HC). As per the ld AR in the case of CIT Vs Gujarat Oil Allied Industries (1993) 201 ITR 325 (Guj), the provisions of Section 80J(6A) were considered. The wording of Section 80J(6A) is similar to that of Section 80AC which is in issue in the present case. The Hon ble Gujarat High Court took the view that the word shall which occurs in Section 80J(6A) be read as may and that the requirement of filing of an audit report alongwith the return was only to be taken as directory in nature and in case the audit report is submitted at any time before the framing of the assessment, it will be sufficient compliance of provisions. It was also argued by the ld AR that it is well settled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed on the decision of the Chandigarh bench of the Tribunal in the case of ACIT Vs Perfect Forgings (2011) 11 ITR (Trib) 166 (Chd) wherein it was held that there is no merit in imposition of penalty with respect to disallowance of deduction U/s 80-IB and 80HHC of the Act in so far as the assessee had disclosed material facts for its computation of income in its return. In respect of such claims, there was no justification for levy of penalty. Reliance was also placed on the decision of Coordinate Bench of Chandigarh Bench of Tribunal in the case of DCIT Vs Parabolic Drugs Ltd. (2015) 58 taxmann.com 319 (Chd Trib) has held as under: Section 271(1)(c), read with section 80-IB, of the Income-tax Act, 1961 - Penalty For concealment of income (Disallowance of claim, effect of) - Assessment year 2005-06 - Assessee-company was engaged in manufacture of bulk drugs and fine chemicals - It claimed deduction under section 80-IB - Assessing Officer held that assessee did not qualify as small-scale industry as investment in plant and machinery was more than monetary limit prescribed by Ministry of industries for small-scale industries - Consequently, Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d upheld in appeal, does not justify the imposition of penalty under section 271(1)(c). The findings recorded in the assessment order only lays down the foundation for levy of penalty. It was pointed out in ACIT v. Rawalpindi Flour Mills (P) Ltd.. (1980) 125 ITR 243 (All), that material collected during assessment proceedings and finding arrived at therein can be relied upon in penalty proceedings but on this basis alone the imposition of penalty cannot be sustained. 7. Ld. AR also placed reliance on the decision of Chandigarh Bench of the Tribunal in the case of Symbiosis Pharmaceuticals (P) Ltd. Vs. DCIT (2017) 190 TTJ 518 (Chd-Trib) wherein the Tribunal has observed as under: Deduction under section 80-IC--Allowability of Belated filing of return under section 139(4)--Reasonable cause--Where assessee filed return within extended period of section 139(4) and delay was caused by reason beyond the control of assessee, liberal interpretation was to be given to procedural requirement of section 80AC and denial of deduction under section 80-IC was not, therefore, justified.--Assessee claimed deduction under section 80-IC. AO disallowed the deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tements were filed well within the time and only due to the shortage of fund, the assessee could not pay self-assessment tax, therefore, return could not be filed before due date. While declining claim of deduction U/s 80IA of the Act, no defect was pointed out by the A.O. with regard to assessee s eligibility save and except there was delay in filing return of income. We also found that eligible amount of deduction U/s 80IA of the Act amounting to ₹ 88,51,859/- was mentioned in the tax audit report and clause (26) of Form 3CD. Thus, there was a substantial compliance of the provisions of Section 80IA read with Section 80AC of the Act by filing tax audit report with audited financial statement well in time. Under these facts and circumstances when there was full disclosure by the assessee and there was no failure on the part of the assessee to fully disclosed all the material facts with regard to claim of deduction U/s 80IA of the Act, we do not find any justification in levying of penalty merely on the ground that due to delay in filing return, the assessee s claim was declined. The Hon ble Supreme Court in the case of CIT v. Reliance Petro Products Ltd. [2010] 322 ITR 158/1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assesses had claimed excessive deductions knowing that they were incorrect, it amounted to concealment of income. It was argued that the falsehood in accounts can take either of the two forms: (i) an item of receipt may be suppressed fraudulently; (ii) an item of expenditure may be falsely (or in an exaggerated amount) claimed, and both types attempt to reduce the taxable income and, therefore, both types amount to concealment of particulars of one's income as well as furnishing of inaccurate particulars of income. Such contention could not be accepted as the assessee had furnished all the details of its expenditure as well as income in its return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the revenue, that, by itself, would not attract the penalty under section 271(1)(c). If the contention of the revenue was accepted, then in case of every return where the claim made was not accepted by the Assessing Officer for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 271(1)(c), read with section 80-IB, of the Income-tax Act, 1961 - Penalty - For concealment of income (Disallowance of claim, effect of) - Assessment year 2004-05 - Assessee was a manufacturer of automobiles components like fastners, radiator caps, gear shifters etc. - For relevant year, assessee filed its return claiming deduction under section 80-IB - Assessing Officer rejected assessee's claim on ground that out of four units belonging to assessee, only two units had made profits but other two units had incurred losses and putting all four units together there was loss - Tribunal confirmed order passed by Assessing Officer denying deduction claimed under section 80-IB - Thereupon, the Assessing officer passed a penalty order under section 271(1)(c) - Tribunal found that assessee had a reasonable basis to stake a claim for deduction under section 80-IB, which had been disallowed upon interpretation of said provision of Act - Tribunal thus held that there was no ground for levy of penalty for furnishing inaccurate particulars of income - Whether since Tribunal had arrived at factual finding that disallowance was made due to interpretation of applicable provision of Act, are th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s return wherein deductions under sections 80-IA and 80-IB were claimed - Assessing Officer rejected assessee's claim for deduction - He also levied penalty under section 271(1)(c) on ground that assessee had wrongly claimed deduction in its return of income - On appeal, assessee contended that it had disclosed all material facts pertaining to computation of deduction admissible under sections 80-IA and 80-IB - Assessee further contended that it was of opinion that interest earned on banks and interest paid to others had a direct nexus to business activities and, therefore, deduction of said amount would be admissible - It was also put forth that there was no deliberate attempt on part of assessee to conceal particulars of income - Commissioner (Appeals) accepted assessee's explanation and set aside penalty order - Tribunal upheld order passed by Commissioner (Appeals) - Whether on facts, no substantial question of law arose from Tribunal's order - Held, yes. 15. In the case of Sharda Construction and Investment Company (2015) 152 ITD 574 (Pune-Trib), the observation of the Tribunal was as under: Section 271(1)(c), read with section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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