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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 ..... 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 that the assessee is a foreign company registered under the laws of Republic of Korea and the assessee is also a Korean tax resident that it is engaged in the business of development of electric power resources, generation and other related business activities, Research and Development of technology related to development and genera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 particulars of income in the books of accounts maintained by the assessee or as to any other claim of deduction. * That initially the assessee had returned its income computed in terms of section 28 of the Act and paid taxes at the normal rates @ 42% and only subsequently the same was revised and income returned on presumptive basis u/s 44BBB o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 shifted the chargeable head of income which resulted in there being increase in tax liability in the hands of the assessee. "CIT v. Hiralal Doshi - ITA No.2331/2013 - Bombay HC: "The contention on behalf of the Revenue that in case there is a tax impact by virtue of change of head during the assessment proceedings then penalty is imposable and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding 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 (Delhi): "Section 271(1)(c) of the Income-tax Act, 1961- Penalty For concealment of income - Assessment year 2001-02-Assessee had declared its income from brokerage and other income against which it had claimed share trading loss - Assessing Officer found that loss was speculative in nature and could not be adjusted against assessee's normal income Assessing Officer hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... troproducts (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 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 case, there would be no question of inviting the penalty under section 271(1)(c) f the Act. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 penalty under section 271(1)(c). The Tribunal after considering the facts, deleted the penalty and observed that since there is no change in the income declared and income assessed by the Assessing Officer, it cannot be said that there were any concealment of income. Relevant extract is reproduced as under: "We find that the income of the assessee during re-assessment proceedings was not enhanced as is ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 case, there would be no question of inviting the penalty under section 271(1)(c) f the Act. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the Return cannot amount to the inaccurate particulars." iii. Commissioner of IT vs Kiranjit Foils Ltd. [2010] taxmann.com 312 (Del HC) The High Court of Delhi, observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore 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 is contrary to the facts as available on record. 4. The Ld CIT(A) has erred in holding that it is a mere change of opinion of the AO in taxing the receipts as FTS completely ignoring the judgment of the Hon'ble ITAT, being the highest fact finding authority which has confirmed the action of the AO holding that the nature of receipts are FTS. 5. The order of Ld. CIT (A) suffers from perversity in so far as it is against the findings of the Hon'ble ITAT with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) therefrom that the dispute only related to the nature of income , there being no adverse findings by the AO relating to the facts of the income earned . We agree with the Ld.CIT(A) that the assessee in such circumstances cannot be charged with having concealed particulars of income. Pertinent is also the fact noted by the Ld.CIT(A) that the assessee itself had returned this income under different heads ,including as FTS as finally held by the AO. The assessee surely himself was uncertain o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 liable to be taxed as income from technical grounds due to the certificate issued by the CA in form 15CA/CB while the assessee has submitted that it was a bonafide claim due to difference of opinion." 7.1. There is no finding in the order of the Assessing Officer with regard to any difference in income returned by the assessee as noted in Ground No.2 of the appeal filed before us. As for the finding of the Ld.CIT(A) in this regard, as noted above by us , she has, as we have noted above, taken ..... X X X X Extracts X X X X X X X X Extracts X X X X
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