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TMI Blog2022 (7) TMI 863X X X X Extracts X X X X X X X X Extracts X X X X ..... ill assessed under Section 115JB of the Act. Circular dated 31 December 2015 was referred to that in cases prior to 1 April 2016 as any adjustment is made, the penalty cannot be levied under Section 271(1) (c) of the Act. Even on this ground, also penalty requires to be deleted. In view of the above arguments, where individually these arguments are tested for levy of penalty levied by learned CIT (A), penalty order suffers from severe infirmities. As following the decision in Mohd. Farhan A. Shaikh [ 2021 (3) TMI 608 - BOMBAY HIGH COURT ] where in it is held that Where assessment order clearly records satisfaction for imposing penalty on one or other, or both grounds mentioned in section 271(1)( c ), a mere defect in notice, not strik ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of opinion. 1.3. The learned CIT (A) has erred in holding that appellant has concealed income by claiming excess deduction under section 80IA. The CIT (A) failed to appreciate that the interest income of Rs 8,67,66,538 was clearly reflected in the audited financial statements of the Appellant and hence, there is no question, of concealment of income. 1.4 Without prejudice to the above, the learned CIT (A) has failed to appreciate that penalty cannot be levied in absence of any additional tax liability on account of reduction in benefit under Section 80IA of the Act (i.e., the tax sought to be evaded as per the law prevailing during the relevant period) as the tax liability continues to be payable on book profits as computed under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ixed deposits on accounts of business requirement then the interest earned is eligible for deduction under Section 80IA of the Act. Assessee submitted that the tariff collected by the assessee is under dispute and pending before the Hon'ble High Court, wherein interim order is passed. Accordingly, the amount collected was placed in fixed deposits. Assessee also submitted that as per license agreement with JNPT, assessee is required to replace crane after some time and for the availability of funds, the same was placed in fixed deposits. Assessee submitted that it was under a bonafide belief and therefore, the charge of furnishing of inaccurate particulars of income should not be imputed. 07. The learned CIT(A) rejected the contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s where interest on fixed deposits receipts is allowed for deduction under Section 80IA of the Act. We are not on the merits of the deduction but on the issue whether penalty under Section 271(1) (c) of the Act can be levied on such claim for furnishing of inaccurate particulars of income. 010. It is also the fact that disallowance of deduction under Section 80IA of the Act on interest on Income tax refund was initiated by the learned Assessing Officer as the addition was made in order under Section 143(3) of the Act. Vide order dated 18 March 2019, proceedings initiated under Section 271(1) (c) of the Act by the learned Assessing Officer was dropped. 011. Assessee also submitted copy of the notice issued under Section 274 read with s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Hon'ble Bombay High Court in Mohd. Farhan A. Shaikh V DCIT [2021] 125 taxmann.com 253 (Bombay)/[2021] 280 Taxman 334 where in it is held that Where assessment order clearly records satisfaction for imposing penalty on one or other, or both grounds mentioned in section 271(1)( c ), a mere defect in notice, not striking off irrelevant matter would vitiate penalty proceedings . Therefore, the appeal of the assessee deserves to be allowed on this point itself. 016. Accordingly, we quash the penalty levied by the learned CIT (A) amounting to ₹2,81,51,400/- under Section 271(1) (c) of the Act. 017. Accordingly, the appeal of the assessee is allowed. Order pronounced in the open court on 18.07.2022. - - TaxTMI - TMITax - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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