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TMI Blog2021 (7) TMI 214X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee are as follows: "1. On the facts and in the circumstances of the case the learned Commissioner of Income Tax(Appeals) has erred in not admitting the additional ground of appeal raised by the appellant company during the course of appellate proceedings for adjudication. The action of the learned Commissioner of Income Tax(Appeals) is not in accordance with the provisions of the Act and law. 2. On the facts and in the circumstances of the case the notional income by way of DEPB credits, DFRC receipts or other export incentives credited in the profit and loss account be not considered as income liable for tax during the year in accordance with the decision of the Honorable Supreme Court in the case of CIT vs. Excel Industries Limited reported in 38 Taxmann.com 100(SC) 3. On appreciation of the facts and circumstances of the case, only net export incentives (and not gross) be considered as profits not eligible for the purpose of granting deduction u/s. 80IC of the Act 4. The appellant craves leave to add, amend, modify or alter the above grounds of appeal at any stage of appellate proceedings. 5. The appellant humbly prays that the appeal be allowed in toto. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he profits eligible for deduction u/s 80IB of the Act shall be restricted to the net benefit after netting out the cost of obtaining the said benefit as specified and observed by the hon'ble Supreme Court in the case of Topman Exports vs. CIT (342ITR 49)" The Revenue objects admissibility of the assessee's alternative/ additional ground. The assessee quotes law settled by the hon'ble apex court in Excel Industries and Topman Exports (supra) propounding computation of notional income from DEPB credits/DFRC receipts/other export incentives accrues not in the year of export; but in the one corresponding to the imports and also devising 'netting' formula to be adopted in excluding face value of the above credits for computing profits eligible for section 80IB deduction; respectively. We reject the Revenue's technical objections and admit the additional grounds in view of the above settled legal preposition in the interest of justice. The assessee also fails to controvert the lower authorities' action excluding the above sums from the purview of section 80IB deduction in principle. The fact also remains that these alternative pleadings require Examination ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 14,39,59,714/- after making the disallowance of deduction u/s 80IB in respect of its Dadra Unit and exclusion of following other incomes from the profits eligible for deduction u/s 80IB of the Act: (a). Foreign exchange gain Rs. 1,38,851/- (b).Scrap sales Rs. 65,52,841/- (c ) Debit/credit balances written back Rs. 39,321/- (d) Misc receipts Rs. 1,00,296/- (e) Addition to the tune of Rs. 34,26,806/- has been made to the book profit u/s 115JB of the Act on account of exclusion of provision for doubtful debts. 11. Penalty proceedings under section 271(1)(c) of the Act were initiated for concealment of income and for furnishing inaccurate particulars of income by the assessee at the additions made at Rs. 34,26,806/- on account of exclusion of provision for doubtful debts from the book profit u/s 115JB of the Act.Considering the facts and circumstances available on record the assessing officer held that assessee has concealed the income of Rs. 34,26,806/-. Therefore, the assessing officer has worked out the penalty @ 100% of the tax sought to be evaded to the tune of Rs. 6,35,330/-. 12. On appeal, the ld CIT(A) has confirmed the penalty i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. The notice in printed form without deleting inapplicable portions by assessing officer would invalidate the penalty proceedings and penalty imposed by the assessing officer under section 271(1) (c ) of the Act would not sustain. The findings of the Hon`ble Court is reproduced below: 180. One course of action before us is curing a defect in the notice by referring to the assessment order, which may or may not contain reasons for the penalty proceedings. The other course of action is the prevention of defect in the notice- and that prevention takes just a tick mark. Prudence demands prevention is better than cure. Answers: Question No. 1: If the assessment order clearly records satisfaction for imposing penalty on one or the other, or both grounds mentioned in Section 271(1)(c), does a mere defect in the notice-not striking off the irrelevant matter-vitiate the penalty proceedings? 181. It does. The primary burden lies on the Revenue. In the assessment proceedings, it forms an opinion, prima facie or otherwise, to launch penalty proceedings against the assessee. But that translates into action only through the statutory notice under section 271(1)(c), read with secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Smt. Kaushalya case (supra) .In fact, for one assessment year, it set aside the penalty proceedings on the grounds of non-application of mind and prejudice. 186. That said, regarding the other assessment year, it reasons that the assessment order, containing the reasons or justification, avoids prejudice to the assessee. That is where, we reckon, the reasoning suffers. Kaushalya's insistence that the previous proceedings supply justification and cure the defect in penalty proceedings has not met our acceptance. Question No. 3: What is the effect of the Supreme Court's decision in Dilip N. Shroff Case (supra) on the issue of non-application of mind when the irrelevant portions of the printed notices are not struck off ? 187 In Dilip N. Shroff case (supra), for the Supreme Court, it is of "some significance that in the standard Pro-forma used by the assessing officer in issuing a notice despite the fact that the same postulates that inappropriate words and paragraphs were to be deleted, but the same had not been done". Then, Dilip N. Shroff case (supra), on facts, has felt that the assessing officer himself was not sure whether he had proceeded on the basis that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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