TMI Blog2009 (7) TMI 918X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the profit of the new undertaking amounting to Rs. 6,99,338. Similar deductions were claimed by the assessee in the subsequent years. During the year under consideration also the assessee claimed the deduction under section 80-I. The Auditor also in Form No. 10CCB had duly certified that the assessee was eligible for deduction under section 80-I of the Act. The assessment for the assessment year 2001-02 was reopened under section 148 vide notice dated 27-1-2005 served on the assessee on 2-2-2005. Based on the audit objection that considering the set off of unabsorbed depreciation from the gross total income, no deduction under section 80-I was available to the assessee. The Assessing Officer withdrew the deduction under section 80-I but the total income was determined for the assessment year 2001-02 at Nil . In view of the set off of unabsorbed depreciation and the withdrawal of the deduction under section 80-I there had been no tax impact. Although penalty was sought to be levied by the Assessing Officer for assessment year 2001-02 on the ground of furnishing of inaccurate particulars of income, the same came to be deleted by the CIT(A) vide his appellate order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the assessee. Second notice under section 143(2) was issued on 9-5-2005 and explanation of the assessee on claim of the assessee under section 80-IB was called for vide notice under section 142(1) dated 15-2-2006, whereas the assessee has paid self assessment tax on the amount of deduction under section 80-IB on 24-2-2006 and filed a letter for withdrawal of deduction on the same date. Thus, the wrong claim of the deduction was withdrawn only after it was detected by the department and brought to the notice of the assessee by way of show-cause notice. Therefore, the assessee s argument that, the deduction withdrawn by itself on its own and there was no mala fide intention on his part cannot be accepted. As already mentioned above the deduction claimed in assessment year 2003-04 was disallowed and the assessee had contested an appeal against that order. Had there been a bona fide belief on that part of the assessee that it is eligible for the deduction which later on found by it incorrect, the assessee company instead of filing an appeal in assessment year 2003-04 would have withdrawn its claim during the course of assessment proceedings itself and immediately have withd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shed inaccurate particulars of income. Further, the facts and circumstances show, beyond any doubt, that there was animus, i.e., conscious concealment or act of furnishing of inaccurate particulars on the part of the appellant. In the given facts and circumstances, the Assessing Officer has rightly imposed penalty at the rate of 100 per cent of the amount of tax sought to be evaded which is worked out to Rs. 24,39,353. With the result, the action of the Assessing Officer is confirmed on this ground. Hence, the appeal is dismissed on this ground." 9. Before us, the learned AR vehemently contended that the claim under section 80-IB was made in the return of income under the bona fide belief that the said deduction is available to the assessee. The assessee was allowed similar deduction in the assessment year 2001-02 vide order dated 27-1-2004 but also under the assessment finalized for the said assessment year under section 147 on 27-6-2005. The deduction under section 80-I was withdrawn in the order passed under section 147 on the ground that in view of unabsorbed depreciation the total income stood determined at Nil , therefore, no deduction under section 80-I was allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer has already selected the case for scrutiny and sought the necessary information in this regard from the assessee. The concealment has already been detected, therefore, it is a fit case where penalty must be sustained. He heavily relied on the recent decision of the Hon ble Supreme Court in the case of Dharmendra Textiles Processors ( supra ) that the penalty is sustainable even where income has remained undisclosed with or without the conscious act of the assessee. According to him, the scenario of the penalty under section 271(1)( c ) had drastically changed due to this judgment. Now penalty can be levied wherever the addition is made as it is a civil liability. The assessee has wrongly claimed the deduction under section 80-IB in the original return. Had the case not been selected for scrutiny, the assessee would have not withdrawn the claim. 12. We have carefully considered the rival submissions and perused the material on record along with the order of the tax authorities below. We have also gone through various case laws as relied upon before us. 13. Section 271(1)( c ) reads as under: "271(1) If the Assessing Officer or the Commissioner (Appeals) [o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explanation or offers an explanation which is found by the Assessing Officer or the Commissioner to be false. The second situation is where the assessee, in respect of any facts material to the computation of his total income, offers an explanation which he is not able to substantiate and also fails to prove that such explanation was bona fide and that all the facts relating to the computation of total income have been disclosed by him. The presumption available under Explanation 1 cannot be drawn unless the case of the assessee falls under either of the clauses, viz., clause ( A ) or clause ( B ). 14. Coming to the facts of the case we noted that the Assessing Officer in this case has initiated penalty proceedings for furnishing the inaccurate particulars of income on the two issues; one relating to the claim of deduction under section 80-IB and the other is the addition made amounting to Rs. 64,800 in respect of capital expenditure. Ultimately the Assessing Officer imposed the penalty by observing that he satisfied that the assessee has evaded the tax liability by furnishing the inaccurate particulars of the income. We noted that in this case the assessee had duly subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o affect the opening stock in the next year, and hence, it could have been easily found out and would not have resulted in any advantage to the assessee. The penalty relatable to the disallowance of loss of Rs. 1,00,112 was rightly deleted by the Tribunal." 16. In our opinion, the case of the assessee is duly covered by the aforesaid decision so far as the claim made under section 80-IB is concerned. Since the learned DR has vehemently relied on the decision of the Hon ble Supreme Court in the case of Dharmendra Textiles Processors ( supra ), we therefore, have to refer to that decision also. In the case of Dharmendra Textiles Processor ( supra ), we noted that the Hon ble Supreme Court has held that penalty under section 271(1)( c ) is a civil liability and that "wilful concealment" and "mens rea" are not essential ingredients for attracting the civil liability as is the case in the matter of prosecution under section 276 of the Act. It has further been held in that case that mens rea is not an essential ingredient for imposing the penalty. The Hon ble Supreme Court in this case nowhere held that if the addition is made, penalty is automatic. This judgment does not ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are incorrect or not accurate or not correct. That means, the particulars have not been furnished in correct/exact manner as is required to be furnished to determine the correct income chargeable to tax of the assessee. At the time when the return was filed by the assessee, can the particulars submitted by the assessee relating to the total income, be regarded to be incorrect. The return in this case was filed on 29-10-2004, at that time the assessment for the assessment year 2001-02 has already been finalized vide order dated 27-1-2004 allowing the deduction to the assessee under section 80-I. This assessment was reopened only vide notice dated 27-1-2005 served on the assessee on 2-2-2005. Since the assessee was already allowed the deduction in the assessment year 2001-02 and the claim of the assessee was duly supported by the auditor s report at the time of filing of the return, in our opinion, it cannot be said that the assessee has submitted the incorrect particulars of income so far as it relates to the deduction under section 80-IB is concerned. Therefore, in our opinion, the decision of the Hon ble Supreme Court in the case of Dharmendra Textiles Processors ( supra ) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the penalty will follow notwithstanding the fact that the assessee was not aware of having earned interest income from the tenth bank account. But in a case where a genuine claim is made for deduction which is not accepted by the Revenue but all the necessary particulars are declared by the assessee in the return of income, it cannot be said by any stretch of imagination that the assessee has concealed his income or furnished inaccurate particulars of income in respect of the claim of deduction which stands repelled by the authorities. If penalty is imposed under such circumstances also then probably there will remain no course open to the assessee for genuinely claiming a deduction which in his opinion is admissible, because the fear of such claim being rejected in eventuality will expose him to the rigor of penalty. Obviously such a proposition is beyond any recognized canon of law." 20. In view of our aforesaid discussion, we are of the view that this is not a case where the assessee has submitted the inaccurate particulars of his income while submitting the income-tax return and, therefore, we delete the penalty imposed under section 271(1)( c ). 21. In the result, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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