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2016 (10) TMI 246 - AT - Income TaxPenalty imposed u/s 271(1)(c) - additions made on account of attribution of business profits to assessee’s alleged PE in India - Held that:- The issue in respect of additions made on account of attribution of business profits to assessee’s alleged PE in India has been restored back to the file of AO. Therefore, the ld. CIT(A) has rightly observed that the ld. AO should have himself modified the penalty order by deleting the amount of penalty imposed upon the assessee in respect of such additions which have been sent back to the AO for fresh adjudication, as per provisions of section 275(1A) of the Act. Moreover, the penalty deleted by ld. CIT(A) on this count has not been challenged by the Revenue in any of the grounds of appeal before us. We, therefore, need not to address much on this part of penalty deleted by the ld. CIT(A). Deletion of penalty with respect to addition on account of FTS, we further do not find any good reason to interfere with the order of ld. CIT(A). It is borne out on record that the assessee had made true and complete disclosure in its return of income that it was following cash system of accounting with respect to FTS. Further there was no concealment of income. The penalty is imposed keeping in view the tax sought to be evaded. In the instant case the assessee had duly offered the income pertaining to the invoices raised by it during the year in subsequent years as and when the fee was received by assessee from M/s. ONGC and hence, there was no loss to the Revenue or evasion of tax. The issue whether income from FTS is taxable on accrual basis or cash basis is a debatable issue and therefore, where two views are possible, penalty is not leviable if the assessee has adopted one of the two possible views. In this context, the reliance placed by assessee in catena of decisions goes to support the case of the assessee. It is notable that every addition/adjustment does not entail penalty u/s. 271(1)(c) of the Act unless it is proved that the assessee has concealed the particulars of income or has furnished inaccurate particulars of such income. Hon’ble jurisdictional High Court has held, in the case of CIT vs Globe Sales Corporation [2005 (1) TMI 697 - DELHI HIGH COURT ] that merely because certain additions/ adjustments are made in the assessment, it does not necessarily follow that penalty is to be levied. In the instant case, there is no an iota of evidence to prove that the assessee has concealed or furnished inaccurate particulars of income on FTS. However, the dispute was with respect to method of accounting adopted by the assessee and that applied by the department. Hon’ble Delhi High court in Devsons Pvt. Ltd vs CIT [ 2010 (11) TMI 84 - DELHI HIGH COURT ] held that merely because tax department does not concur with the stand adopted by the assessee, it will not be enough reason to hold that assessee is guilty of concealment of income or of furnishing inaccurate details. Even if the claim of the assessee was found wrong upto the stage of Tribunal, such incorrect claim in the return, in the peculiar facts of the present case, cannot be said to prove furnishing of inaccurate particulars of income where the assessee had furnished complete details in respect of the claim so made in the return of income itself. For this, we stand fortified by the decision in CIT vs. Reliance Petroproduct (P) Ltd.,(2010 (3) TMI 80 - SUPREME COURT ). Therefore, for want of any contrary material brought on record, we are not inclined to interfere with the order of the ld. CIT(A) in deleting the penalty imposed against the assessee.- Decided in favour of assessee.
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