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TMI Blog2023 (12) TMI 810X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore merely because the AO assessed the income of the assessee as FTS u/s 115A of the Act, the assessee cannot be charged with having concealed or furnished inaccurate particulars of income for returning it as income u/s 44BBB of the Act. The fact that in similar circumstances in succeeding years the AO did not find it fit to levy penalty streghthens the case for no penalty to be levied in the impugned year. CIT(A) s , we find, has adequately dealt with the AO s basis of levying penalty noting that it rests on Form 15C disclosing income of the assessee as fts and the assessee therefore being fully aware of the nature. The Ld.CIT(A) has brushed aside this logic noting that Form 15C is required to be filed by the payer of income and the assessee is therefore not bound by any disclosure made in it since it is not responsible for the same. DR was unable to point any infirmity in this finding of the Ld.CIT(A). We see no reason therefore to interfere in the order of the Ld.CIT(A) holding that with no infirmity found in the books of the assessee and only the nature of income being in dispute it tantamounted to mere disallowance of claim which would not attract levy of penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see despite repeated notices of hearing sent to the assessee. As is evident from the order-sheet, in all five notices were given to the assessee and despite the notices being sent through Registered post and also being served through the DR the assessee has not responded to the same. Since sufficient opportunities of hearing have been granted to the assessee, who for reasons best known to it did not choose to come present , the matter was proceeded to be heard ex-parte the assessee. 2.1. As noted above, the present appeal of the Department challenges the order of the Ld.CIT(A) deleting the penalty levied by the Assessing Officer on the assessee for having concealed and /or furnished inaccurate particulars of income, the penalty being levied u/s. 271(1)(c) of the Act. On going through the penalty order passed by the Assessing Officer, we have noted that penalty was levied by the Assessing Officer noting that the assessee had incorrectly returned its income as taxable u/s. 44BBB of the Act, while the Assessing Officer had held the same taxable as Fee for Technical Services (FTS). The assessment order, assessing the income of the assessee so, reveals the facts of the case as being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticulars of income and, accordingly, initiated proceedings u/s. 271(1)(c) of the Act. While levying penalty u/s. 271(1)(c) of the Act, the Assessing Officer rejected assesses plea that its claim of returning income u/s 44BBB of the Act was a bonafide claim and the income assessed by the AO u/s 115JA of the Act was due to difference of opinion, noting that the penalty was initiated on the ground that the assessee was aware of the fact that the receipts were liable to be taxed as Fees from technical services since the Certificate issued by C.A. in Form No.15CA/CB clearly stated so. The AO held that it was a clear case of furnishing inaccurate particulars of income and, accordingly, levied penalty of 100% of the tax sought to be evaded by the assessee amounting to Rs. 53,97,870/-. 3. We have carefully gone through the order of the Ld.CIT(A) deleting the levy of penalty and we have noted that she deleted the penalty noting that the only impact of the assessment was rejecting the assessee s claim of returning presumptive income u/s. 44BBB of the Act and treating it as taxable as FTS @ 10% of the gross income. That there were no adverse findings as to any inaccurate particul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome albeit by falling under the same head, income from business and profession . She has relied on various decisions of the Hon ble High Courts holding that mere change of head of income will not tantamount furnishing inaccurate particulars of income/concealing particulars of income for levy of tax u/s. 271(1)(c) of the Act. Her findings in this regard at page Nos.30 to 32 of the order is as under: The claim of filing inaccurate particulars of income has arisen only on account of the AO taking a view as to the underlying business activities not being in the nature of turnkey power projects as specified in section 44BBB of the Act but of the nature of FTS. It is pertinent to mention here that the Project undertaken by the Appellant did have approval from Central Govt. of India on 1st November, 2006, through the Ministry of Power, Government of India for Ultra Mega power project of a capacity of 1000 MW or more. There is thus clearly a change of head albeit both falling under the same head Income from Business or Profession . Reliance is placed on the following judgments wherein a view is taken that the penalty under section 271(1)(c) cannot be levied merely because the AO has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate particulars of income by stating incorrect facts. Whether Tribunal was justified in cancelling penalty levied upon assessee - Held, yes (Para 3) CIT v. Praveen B. Gada (HUF).- (2011) 244 CTR 463 - Madhya Pradesh HC: Section 271(1)(c) of the Income-tax Act, 1961 Penalty For concealment of income-Assessment year 2004-05- Whether in absence of any independent finding by Assessing Officer that assessee concealed his income or furnished inaccurate particulars, merely because in quantum proceedings assessee treated a certain sum as business loss whereas revenue treated it as capital loss, provisions of section 271(1)(c) would not get attracted - Held, yes. Simran Singh Gambhir v. DDIT - ITA No. 1423/Del/2013 - Delhi ITAT: Section 271(1)(c) of the Income-tax Act, 1961- income (Disallowance of claim, effect of) - Assessment year 2008-09- Where Penalty For concealment of assessee offered to tax income from maturity of National Housing Bond under head long term capital gains' but Assessing Officer chose to tax same under head other sources, penalty levied under section 271(1)(c) was to be cancelled. CIT v. Auric Investment Securities Ltd. [2007] 163 Taxman 533 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to tax in the original return and first revised return, the Appellant being non-resident can be expected to be ignorant of the local laws of India. 3.3. The Ld.CIT(A) has also held that mere disallowance of claim of the assessee will not attract the levy of penalty u/s. 271(1)(c) of the Act and has relied on the decisions of the Hon ble Apex Court in the case of CIT vs. Reliance Petroproducts (P.)Ltd. reported in (2010) 189 Taxman 322 (SC), wherein the Hon ble Supreme Court observed as under: 9. We are not concerned in the present case with the mens rea. However, we have to only see as to whether in this case, as a matter of fact, the assessee has given inaccurate particulars. In Webster's Dictionary, the word inaccurate has been defined as:- not accurate, not exact or correct; not according to truth, erroneous; as an inaccurate statement, copy or transcript. We have already seen the meaning of the word particulars in the earlier part of this judgment. Reading the words in conjunction, they must mean the details supplied in the Return, which are not accurate, not exact or correct, not according to truth or erroneous. We must hasten to add here that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted clearly proves that the Assessing Officer also believed that it is not a fit case for levy of penalty. The relevant portion of the order of the Ld.CIT(A) reads as under: 15. Further, in the subsequent two years i.e. AY 2012-13 and AY 2013-14, the AO himself has dropped the penalty proceedings, which also clearly proves that the AO also believes that he does not have any case for levy of penalty on the Appellant. 15.1 Reliance is placed on the decision of ACIT us Nortel Networks Ltd. [2013] 37 Taxmann.com 453 (ITAT Delhi), wherein the assessee was engaged in providing marketing services, installation, testing and commissioning services and technical services including repair maintenance of equipments supplied by the group companies. During original scrutiny assessment, AO held that the income of the assessee was in the nature of fee for technical service and was taxable at the rate of 15 per cent under article 12. Subsequently, the Assessing Officer changed his mind and held that since the assessee had a PE in India, the assessee's case was covered under article 5(2)(1) and its income was taxable at the rate of 20 per cent and initiated reassessment and imposed p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee was false. In view of above, the assessee's case does not fall within the ambit of Explanation 1 to Sec. 271(1) (c) and no penalty can be levied by merely disbelieving explanation given by the assessee. ii. Commissioner of Income Tax us Reliance Petroproducts (P.) Ltd. [2010] 189 Taxman 322 (SC), the Supreme Court observed that: 9. We are not concerned in the present case with the mens rea. However, we have to only see as to whether in this case, as a matter of fact, the assessee has given inaccurate particulars. In Webster's Dictionary, the word inaccurate has been defined as:- not accurate, not exact or correct; not according to truth, erroneous; as an inaccurate statement, copy or transcript. We have already seen the meaning of the word particulars in the earlier part of this judgment. Reading the words in conjunction, they must mean the details supplied in the Return, which are not accurate, not exact or correct, not according to truth or erroneous. We must hasten to add here that in this case, there is no finding that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false. Such not being the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld.CIT(A) held that when there was no change in the income declared and income assessed by the Assessing Officer, mere change in the head of taxation or difference of opinion due to a debatable issue cannot be construed as concealment of income or furnishing inaccurate particulars of income and, accordingly, directed to delete the levy of penalty. 4. The Department is aggrieved by this order of the Ld.CIT(A) and has raised the following grounds before us: 1. That the Ld. CIT(A) has erred in facts and in law in deleting the minimum penalty of Rs. 53,97,870/- levied @ 100% u/s. 271(1)(c) of Act for furnishing of inaccurate particulars of income. 2. The Ld. CIT(A) has erred in facts and in Law in holding that there is no difference in the returned income of the assessee and the assessed income without even verifying the facts of the case as in the Return of income, the gross receipts shown by the assessee was Rs. 4.43 crores whereas the assesssed income was Rs. 5.39 crores. 3. The order passed by the Ld CIT (A) suffers from perversity on the facts as the Ld. CIT(A) has held that there is no difference between the returned income and the assessed income which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urned the same u/s 44BBB of the Act. Taking up Ground No.1 challenging the deletion of penalty by the Ld.CIT(A) , we do not find any merit in the same. The Ld.CIT(A) has noted very pertinent facts while deleting the levy of penalty: She has noted that no infirmity in the books of the assessee, as far as the claim of income is concerned ,was found by the AO. That, only the nature of receipts has been the matter of dispute . That the assessee had itself repeatedly taken a different stand on the nature of its receipts disclosing the same as business income initially, changing it to FTS in the second revised return of income filed and finally claiming it to be in the nature of receipts from turn key power projects u/s. 44BBB of the Act. That, all its views were based on the opinion of Consultants, the assessee being a foreign entity and non-resident in India. The Ld.CIT(A) has also noted that in the subsequent years ,i.e A.Y 12-13 A.Y 13-14, penalties initiated on identical issue by the Assessing Officer, was dropped. All these findings of the Ld.CIT(A) have not been controverted before us. We see no infirmity in the conclusion drawn by the Ld.CIT(A) the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e agreement with the Ld.CIT(A) that there is no case made out by the Revenue Authorities for charging the assessee with having furnished inaccurate particulars of income so as to attract the levy of penalty u/s. 271(1)(c) of the Act. Ground of appeal Nos.1 is also dismissed. 7. As far as the specific averment of the Department that the Ld.CIT(A) s order suffered from perversity on finding no difference in the returned income and assessed income raised in ground No. 2 3 , we do not find any merit in the same. We hold, so noting, that this difference in income pointed out in Ground No.2 was never the basis adopted by the Assessing Officer for holding that the assessee had furnished inaccurate particulars of income for levying the penalty u/s. 271(1)(c) of the Act. The penalty order of the Assessing Officer categorically states that the penalty was initiated and is being levied on the ground that the income was taxable as FTS and not u/s. 44BBB of the Act. This is evident from paragraph No.5 of the assessment order, which is reproduced hereunder:- 5. The penalty was initiated by the erstwhile AO on the ground that the assessee was aware of the fact that the receipts were liab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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