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TMI Blog2020 (3) TMI 590X X X X Extracts X X X X X X X X Extracts X X X X ..... ble claim of deduction u/s 10B - In the instant case, as mentioned earlier the appellant filed a letter dated 14.12.2012 intimating the revision of its return filed on 05.12.2012 u/s 139(5) and the reasons for revision of the said original return. The AO accepting the said revised return passed an assessment order u/s 143(3) without making any further adjustments, except by observing at para 4 that by putting inadmissible claim of deduction u/s 10B, the assessee has not only furnished inaccurate particulars of income but also concealed income within the meaning of section 271(1)(c) of the Act. It is relevant to mention here that the AO accepted the revised return and made assessment. If he accepted the revised return, there was no question of making inadmissible claim of deduction u/s 10B in such revised return. In fact, there is no concealment or inaccurate furnishing of income in such revised return. We delete the penalty levied by the AO u/s 271(1)(c) - Decided in favour of assessee - ITA No. 670/MUM/2017 - - - Dated:- 10-2-2020 - Shri Saktijit Dey (Judicial Member) And Shri N.K. Pradhan (Accountant Member) For the Assessee : Shri Ronak Doshi, AR For the Revenue : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. since the claim was made relying on Form 56G which was duly certified by the expert i.e. Chartered Accountant, no penalty can be levied on the disallowance of the same; e. when the process of detection of allegedly concealed income was not complete, in fact nothing related to the issue under consideration was pointed out by the AO, till date of filing of revised returns, imposition of penalty on Appellant u/s 271(1)(c)of the Act was not justified. 2.3 The Appellant prays that the AO be directed to delete the aforesaid penalty of ₹ 1,58,30,000/- levied under section 271(1)(c) of the Act. 3.1 On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of the AO in levying penalty of ₹ 1,58,30,000/- under section271(1)(c) of the Act in respect of the entire addition made in the assessment order without restricting the same to the extent of alleged tax sought to be evaded by the Appellant. 3.2 The Ld. CIT(A) failed to appreciate and ought to have held: a. that as per the provisions of Explanation 4 to sub-clause (iii) to section 271(1)(c), the amount of sought to be evaded is defined to mean difference be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugned assessment year the assessee filed revised return of income on 05.12.2012 i.e. after notices were issued u/s 143(2) dated 31.07.2012 and u/s 142(1) dated 24.11.2012 and served upon the assessee, (iii) the assessee has not filed appeal before the Ld. CIT(A). On the basis of the above facts and reasons, the AO held that by making such an improper claim of depreciation, the assessee has willfully reduced its incidence of taxation and thereby concealed its income as well as furnished inaccurate particulars of its income. Therefore, he levied a minimum penalty of ₹ 1,58,30,000/- u/s 271(1)(c) of the Act. 4. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). We find that vide order dated 29.11.2016, the Ld. CIT(A) agreed with the reasons given by the AO and dismissed the appeal filed by the assessee. 5. Before us, the Ld. counsel for the assessee submits that the appellant was registered with EOU on 25.08.2001, though it commenced operations on 01.12.2000; it had been claiming deduction u/s 10B from AY 2002-03 based on mandatory filing of audit report in Form 56G ; thus following the same, originally, even for the impugned assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specific detection to that effect and hence no penalty can be levied u/s 271(1)(c). It is submitted by the Ld. counsel that though notice u/s 143(2) was issued in July 2012, the questionnaire issued in November 2012 was very general and asked various details which were not present in appellant s case ; there was no specific query of AO that in view of expiry of ten years, why deduction u/s 10B is claimed. It is thus explained that since the appellant revised its return prior to specific detection by AO and the fact that AO has accepted revised return and assessed appellant on such basis, penalty cannot be levied. In this regard reliance is placed by him on the decision in PCIT v. Niraj Jindal (ITA No. 463/2016) dated 09.02.2017 by Delhi High Court; CIT v. Manjunatha Cotton Ginning Factory 359 ITR 565 (Karn.) Reliance is also placed on the order of the ITAT, Mumbai in Archana Talati (ITA No. 696/Mum/2016), wherein the Tribunal following the decision of Punjab Haryana High Court in Rajiv Garg deleted penalty where post notice u/s 148, the assessee included in its return certain income and paid taxes voluntarily and such return was regularized by the AO. It is stated by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder dated December 21, 2016) (Trib- Mum); Sejal P. Savla v. ACIT (ITA No. 3382/Mum/2015, order dated August 10, 2016) (Trib- Mum); ACIT v. Dipesh M. Panjwani (ITA No. 6330, 5878, 6328, 6188/M/12, order dated March 18, 2016) (Trib- Mum); Sanghavi Savla Commodity Brokers P. Ltd. v. ACIT (ITA No. 1746/M/011, order dated December 22, 2015) (Trib- Mum); Parinee Developers Pvt. Ltd. v. ACIT (ITA No. 6772/M/2013, order dated September 11, 2015) (Trib- Mum); Shri Hafeez S Contractor v. ACIT (ITA No. 6222-6223/M/2013, order dated September 2, 2015) (Trib-Mum); H. Lakshminarayana v. ITO (2015) (61 taxmann.com 373) (Trib- Bang); Tulip Mines Pvt. Ltd. v. DCIT (ITA No. 2407/Kol/2013, order dated October 7, 2016); Suvaprasanna Bhatacharya v. ACIT (ITA No. 1303/Kol/2010, order dated November 6, 2015) (Trib-Kol); DCIT v. Ittina Properties Pvt. Ltd. (ITA No. 36/Bang/2014, order dated November 21, 2014) (Trib- Bang); A.R. Chadha v. ACIT (80 ITD 56) (Trib-Del) (TM). Without prejudice to the above, it is stated that non-filing of appeal against additions in assessment itself does not amount to acceptance of disallowance and cannot automatically form basis for levy of penalty u/s 271(1)(c). In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal since the notice was issued without specifying the exact charge by the Department against the assessee ; however, in so far as AY 1968-69 and 1969-70 were concerned, the High Court held that on facts for those year, the assessee fully knew the details of the exact charge of the Department against the assessee and hence merely mistake in language used or non-striking off any inaccurate particulars did not invalidate the notice ; at the same time the High Court also held that in such a case the entire factual background should be considered. It is argued by the Ld. counsel that in the present case the Department has not specified the exact charge on which penalty is levied ; in fact in the assessment order itself, the AO without being specific, decided that the appellant had not only furnished inaccurate particulars but also concealed income. Relying on the decision in Manjunatha Cotton Ginning Factory (supra), wherein the Hon ble Karnataka High Court has dealt with the issue of defective notice u/s 274, it is stated by him that subsequently, the Supreme Court in SSA s Emerald Meadows (supra) has upheld similar view taken by the Karnataka High Court. Also it is explained by h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the claims available including the claim u/s 10B wherein the anomaly of the interpretation of section 10B was discussed and decided to revise the return for AY 2011-12 and withdraw the claim of deduction u/s 10B of the Act. It is stated that as per section 271(1)(iii), penalty for concealment of income or furnishing of inaccurate particulars of income is determined based on amount of tax sought to be evaded which has been defined inter alia, as the difference between the tax due on the income assessed and the tax which would have been chargeable had such total income been reduced by the amount of concealed income or income for which inaccurate particulars have been furnished. It is stated that the assessee filed its original return with total income of ₹ 16,15,480/- and paid tax u/s 115JB; it paid tax under MAT amounting to ₹ 91,82,026/-. Subsequently, after revising the return of income, the appellant withdrew its claim u/s 143(3) with assessed income at ₹ 4,92,69,600/-. The AO completed the assessment u/s 143(3) with assessed income at ₹ 4,92,69,600/- and tax payable at ₹ 1,63,04,652/-. The AO levied penalty at ₹ 1,58,30,000/- being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in existence and it was only post search and statement recorded that assessee accepted that claim was wrong and accepted denial of depreciation; the High Court noted no action was taken by that assessee against another company for fraud and but for search such fact would not have come to light. The Ld. counsel submits that on the issue of notice u/s 274 non-striking of, the High Court observed that firstly, the plea was taken first time before the High Court. Referring to the present case it is stated by him that it is undisputed that year on year and in fact last four assessment years, the case was taken for scrutiny and claim of deduction u/s 10B was allowed ; there was no detection by the AO as the notice was issued was purely generic ; the appellant had suo motu filed revised return which was accepted by the AO. Thus it is explained by him that on facts the case of Sundaram Finance (supra) is distinguishable where claim was wrong, due to search it was found out and later admitted by the assessee. Referring to the decision of the Hon ble Bombay High Court in Sesa Resources (38 taxmann.com 224), wherein it is held that no penalty would be levied as there was no concealment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particular manner or reduce it into writing. Also the Ld. DR refers to the following finding in CIT v. Zoom Communication Pvt. Ltd. (ITA 07/2010) delivered by the Hon ble Delhi High Court on 24.05.2010 : 21. We find that the assessee before us did not explain either to the Income Tax Authorities or the Income Tax Appellate Tribunal as to in what circumstances and on account of whose mistake, the amounts claimed as deductions in this case were not added, while computing the income of the assessee company. We cannot lose sight of the fact that the assessee is a company which must having professional assistance in computation of its income, and its accounts are compulsorily subjected to audit. In the absence of any details from the assessee, we fail to appreciate how such deductions could have been left out while computing the income of the assessee company and how it could also have escaped the attention of the auditors of the company. 7. We have heard the rival submissions and perused the relevant materials on record. The reasons for our decisions are given below. Broadly stated, there are two grounds involved in this appeal. The first ground raised in this appeal is ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date 10.07.2014 before the AO. As mentioned earlier, the AO has initiated the penalty proceedings not only for furnishing inaccurate particulars of income but also for having concealed the income and subsequently levied penalty having considered the above two ingredients. Therefore following the order of the Hon ble Bombay High Court in Samson Perincherry (supra) and the Hon ble Supreme Court in Mak Data P. Ltd. (supra), we hold that there is no technical defect in initiating the penalty proceedings u/s 271(1)(c) of the Act. Thus the first ground of appeal is decided against the assessee. 7.1 However, we find that the appellant filed its return of income for the AY 2011-12 on 29.09.2011, after claiming deduction of ₹ 4,76,54,118/- u/s 10B of the Act. The said return was accompanied by the tax audit report and also the audit report in Form No. 56G, which is required for claiming deduction u/s 10B of the Act. Pursuant to the filing of return of income, the AO issued a notice u/s 143(2) dated 31.07.2012. Thereafter, a notice u/s 142(1) dated 30.11.2012 was issued by the AO calling for various details as mentioned therein. The appellant thereafter filed a letter dated 14.12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alty imposed by invoking Explanation to section 271(1)(c) on the basis that the returned income was less than 80% of the assessed income. The Tribunal held that the latter return could not be treated as revised return u/s 139(5) because it was not a case of inadvertent omission but of conscious concealment of particulars of income in the original return. It further held that the imposition of penalty was a matter of judicial discretion, not governed by CBDT s Instructions and hence, the said public notice was not binding of on the Departmental Officers. The Tribunal therefore, confirmed the penalty order and also the application of Explanation to section 271(1)(c). On appeal by the assessee, the Hon ble Bombay High Court held that There was no justification for the conclusion that the latter return was not a revised return as contemplated under section 139(5). The incorrectness in the original return had not been discovered by the ITO. Account books were impounded by him merely to remove the suspicion which arose in his mind due to some discrepancies and to find out the truth. Much before the enquiry was completed and any discoveries of evasion were made the return was filed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particulars of income on the part of the assessee and therefore, the authorities below were justified in setting aside the penalty levied u/s 271(1)(c) of the Act. In Sesa Resources Ltd. v. ACIT (2013) 38 taxmann.com 224 (Bom), the assessee had claimed in deduction u/s 10B of the Act. The appellant, however, was denied the same. The orders in this regard had attained finality. The question before the High Court was, whether merely on account thereof, the assessee is liable for penalty. The Hon ble Bombay High Court held, following the judgment of the Hon ble Supreme Court in CIT v. Reliance Petroproducts (P.) Ltd. (2010) 322 ITR 158 (SC) and its own judgment in CIT v. Aditya Birla Nova Ltd. [ITA No. 3899 of 2010] held that the Tribunal was in error in holding that merely because the claim for deduction was denied, the appellant is liable to pay penalty. In CIT v. Shankerlal Nebhumal Uttamchandani (2009) 311 ITR 327 (Guj), during the course of search of the assessee's premises various documents, loose papers, passbooks, bank statements, etc. were found and seized. On the basis of various passbooks of Vysya Bank and Canara Bank in relation to bank accounts in the names of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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