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Dy.Commissioner of income Tax, Central Circle-I, Faridabad. Vs. Crew Bos Products Pvt. Ltd., 624C, Jaina Tower-1, District Centre, Janakpuri, New Delhi-110058
August, 11th 2014
                                       1                     ITA No. 1948/Del/2013
                                                                Asstt.Year: 2003-04

             IN THE INCOME TAX APPELLATE TRIBUNAL
                    DELHI BENCH `B' NEW DELHI

            BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT
                               AND
           SHRI CHANDRAMOHAN GARG, JUDICIAL MEMBER

                          ITA NO. 1948/DEL/2013
                         Assessment Year : 2003-04

Dy.Commissioner of income Tax, vs Crew Bos Products Pvt. Ltd.,
Central Circle-I,                    624C, Jaina Tower-1,
Faridabad.                          District Centre, Janakpuri,
                                    New Delhi-110058
                                    (PAN: AAACC3222F)
(Appellant)                          (Respondent)
                       Appellant by: Smt. Parwinder Kaur, Sr.DR
                      Respondent by : None

                                 ORDER

PER CHANDRAMOHAN GARG, JM

      These appeals have been preferred by the Revenue against the order

of   the    CIT(Central), Gurgaon dated 08.01.2013           in Appeal        No.

1/3(LDH)/CIT(A) (C)/GGN/2011-12 for AY 2003-04.

2.    The revenue has raised following grounds in this appeal:-

              "(i) Whether on the facts and in the circumstances of the
            case, the ld. CIT(A) was justified in deleting the penalty of
            Rs.12,08,047/- imposed by the AO u/s 271(1)(c) of the
            Income Tax Act, 1961 by ignoring the fact that while
            deciding the quantum appeal, the addition made by the AO
            has been sustained by the ld. CIT(A)?
                                       2                     ITA No. 1948/Del/2013
                                                                Asstt.Year: 2003-04

             (ii) Whether under the circumstances when the claim of
           the assessee u/s 80HHC was found to be not admissible,
           penalty u/s 271(1)(c) of the Act is leviable?"

3.    Briefly stated, the facts giving rise to this appeal are that the original

assessment was completed at a total income of Rs. 81,04,620/- vide order

dated 30.11.2006 passed u/s 143(3) of the Income Tax Act, 1961 (for short

the Act). Subsequently, the above assessment order was set aside by the

CIT, Delhi-I, New Delhi u/s 263 of the Act dated 27.03.2008 by observing

that the order passed by the AO was erroneous and prejudicial to the interest

of revenue as the assessee has claimed excessive deduction u/s 80HHC of

the Act and set aside the order of the AO with the direction to frame a fresh

assessment order in accordance with law after giving proper opportunity of

hearing for the assessee. During the reassessment proceedings in pursuance

to order u/s 263 of the Act, the assessee was asked to explain as to why in

reference to section 80HHC of the Act, the total income of the business

including both in relation to export oriented unit as also the other exports be

not taken for computation of deduction u/s 80HHC of the Act.                After

considering the assessee's submissions, the AO did not find any force in it

and held that the Act is quite explicit on the issue and the AO made

recomputation of deduction according to which the assessee was found

entitled to claim deduction u/s 80HHC of the Act to the tune of
                                      3                       ITA No. 1948/Del/2013
                                                                 Asstt.Year: 2003-04




Rs.25,13,742/- as against the deduction of Rs. 58,00,945 as claimed by the

assessee in its return of income filed with the department.

4.    Subsequently, the AO initiated penalty proceeding u/s 271(1)(c) of the

Act and held that the assessee has concealed particulars of its taxable income

and has furnished inaccurate particulars of its income by way of claiming

excess deduction u/s 80HHC of the Act as discussed above. Finally, the AO

passed penalty order dated 28.3.2011 and imposed penalty of Rs.12,08,047.

The aggrieved assessee preferred an appeal before the CIT(Central),

Gurgaon which was allowed by deleting the penalty. Now, the aggrieved

revenue is before this Tribunal in the second appeal with the grounds as

reproduced hereinabove.

5.    When the case was called for hearing, neither the assessee nor his

representative appeared and there is no application for adjournment before

us. On careful perusal of the relevant material placed on record as well as

penalty and impugned order, we observe that the appeal may be disposed of

after hearing the ld. DR and we proceed to decide the appeal in absence of

assessee and his representative.

6.    We have heard arguments of ld. DR and carefully perused the relevant

material placed on record, inter alia assessment order, penalty order and

impugned order by which the CIT(Central), Gurgaon cancelled and deleted
                                       4                     ITA No. 1948/Del/2013
                                                                Asstt.Year: 2003-04

the penalty. Ld. DR submitted that the CIT was not justified in deleting the

penalty imposed by the AO by ignoring the fact that while deciding the

quantum appeal, the addition made by the AO has been sustained by the CIT

and therefore the AO rightly held that the assessee furnished inaccurate

particulars of its income and also concealed the particulars of taxable income

and the AO rightly imposed penalty u/s 271(1)(c) of the Act. The DR

vehemently contended that the CIT deleted the penalty without any sound,

cogent or justified reasoning. The DR finally prayed that the impugned

order may be set aside by restoring that of the penalty order.

7.    From bare reading of impugned order, we observe that the CIT,

Gurgaon deleted the penalty by following the decision of Hon'ble Supreme

Court in the case of CIT vs Reliance Petroproducts Pvt. Ltd. 322 ITR

158(SC) wherein their lordships interpreted the intendment of the legislature

and provisions of section 271(1)(c) of the Act. The relevant para 10 of this

order reads as under:-

             "10. It was tried to be suggested that s. 14A of the Act
           specifically excluded the deductions in respect of the
           expenditure incurred by the assessee in relation to income
           which does not form part of the total income under the Act.
           It was further pointed out that the dividends from the
           shares did not form part of the total income. It was,
           therefore, reiterated before us that the AD had correctly
           reached the conclusion that since the assessee had claimed
           excessive deductions knowing that they are incorrect; it
           amounted to concealment of income; it was tried to be
                                      5                      ITA No. 1948/Del/2013
                                                                Asstt.Year: 2003-04

           argued that the falsehood in accounts can take either of the
           two forms; (i) a 17 item of receipt may be suppressed
           fraudulently; (ii) an item of expenditure may be falsely (or
           in an exaggerated amount) claimed, and both types
           attempt to reduce the taxable income and, therefore both
           types amount to concealment of particulars of one's
           income as well as furnishing of inaccurate particulars of
           income. We do not agree, as the assessee had furnished all
           the details of its expenditure as well as income in its
           return, which details, in themselves, were not found to be
           inaccurate nor could be viewed as the concealment of
           income on its part. It was up to the authorities to accept its
           claim in the return or not. Merely because the assessee
           had claimed the expenditure, which claim was not
           accepted or was not acceptable to the Revenue, that by
           itself would not, in our opinion, attract the penalty under s
           271 (l) (c). If we accept the contention of the revenue then
           in the case of every return where the claim made is not
           accepted by AO for any reason, the assessee will invite
           penalty under s. 271 (1) (c ). That is clearly not the
           intendment of the legislature."


8.    We further observe that the CIT has also relied on the decision of

Hon'ble Supreme Court in the case of M/s Hindustan Steel Ltd. vs State

of Orissa (1972) 83 ITR 26(SC) and decision of Hon'ble High Court of

Delhi in Escorts Finance Ltd. (2009) 226 CTR (Del) 105 wherein it was

held that where facts are clearly disclosed in the return, penalty cannot be

levied merely because an amount is not allowed or taxed as income.

Turning to the facts and circumstances of the present case, admittedly, the

assessee made claim of deduction u/s 80HHC of the Act which was reduced

during the reassessment proceedings finalized u/s 263/143(3) of the Act and
                                      6                        ITA No. 1948/Del/2013
                                                                  Asstt.Year: 2003-04




a substantial part of the claim of the assessee for deduction u/s 80HHC of

the Act was reduced and the AO held that the assessee was entitled to claim

deduction u/s 80HHC of the Act of Rs.25,13,742 or against the deduction of

Rs.58,00,945 as claimed by the assessee in its return of income. In this

factual matrix, while the AO passed an order of reassessment in pursuance to

order of CIT u/s 263 of the Act and on recomputation of deduction, the AO

allowed the claim of the assessee for deduction u/s 80HHC Act at a lower

figure but even in this situation, it cannot be inferred that the assessee has

concealed its particulars of income or has furnished inaccurate particulars of

its income.   Thus, we come to a conclusion that the CIT was right in

following decision of Hon'ble Supreme Court in the case of CIT vs Reliance

Petroproducts Pvt. Ltd. (supra) and the CIT deleted the penalty on just and

cogent reason because penalty cannot be levied merely because the

assessee's claim was not accepted or was not acceptable to the revenue, that

by itself would not attract the penalty u/s 271(1)(c) of the Act. Accordingly,

we are unable to see any ambiguity, perversity or any other valid reason to

interfere with the impugned order and appeal of the revenue being devoid of

merits is dismissed.

9.    In the result, the appeal of the revenue is dismissed.
                                    7                     ITA No. 1948/Del/2013
                                                             Asstt.Year: 2003-04

Order pronounced in the open court on 8.8.2014.

     Sd/-                                            Sd/-
  (G.D. AGRAWAL)                           (CHANDRAMOHAN GARG)
VICE PRESIDENT                                JUDICIAL MEMBER

DT. 8th AUGUST 2014
`GS'

Copy forwarded to:-

   1.   Appellant
   2.   Respondent
   3.   C.I.T.(A)
   4.   C.I.T. 5. DR
                                                  By Order

                                                  Asstt.Registrar

 
 
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