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2019 (9) TMI 1236 - AT - Income TaxPenalty u/s 271(1)(c) - exemption u/s 10(20A) - HELD THAT:- In a number of cases that ‘in the absence of non-recording of satisfaction note by the AO during the course of assessment proceedings regarding concealment or furnishing of inaccurate particulars of income, penalty u/s 271(1)(c) is not impossible. It can be seen from the records that since Assessment Year 1996-97 (first year for which Income-Tax return was filed by the assessee company) exemption u/s 10(20A) was being claimed which was denied at the level of Assessing Officer and CIT(A). Against this decision, the assessee company has filed second appeals before the ITAT, right from Assessment Year 1996-97 onwards which are pending for adjudication before the ITAT. Since it is a matter of legal opinion whether exemption u/s 10(20A) is allowable or not, it cannot be said that the assessee company concealed its income or furnishing inaccurate particulars of its income. Hence Penalty u/s 271(1)(c) was not leviable. AR also pointed out that there is no satisfaction note regarding concealment or furnishing of inaccurate particulars of income was recorded by the Assessing Officer during the course of assessment proceedings. The question whether exemption u/s 10(20A) is allowable or not, is a question of law which is pending for adjudication before the ITAT. This issue, thus is debatable on which two opinions are possible and hence penalty u/s 271(1)(c) is not leviable. Under the penalty u/s 271(1)(c) is required to be imposed with reference to tax sought to be evaded. In the order imposing penalty, this requirement of law has not been fulfilled in as much as tax sought to be evaded has not been worked out. There is no tax which is sought to be evaded. The assessee company had paid full tax on income declared in the return without taking into consideration its claim for exemption u/s 10(20A). These facts were properly adjudicated by the CIT(A) and thus, there is no need to interfere with the findings of the CIT(A). - Decided against revenue Revision u/s 263 - assessment of income under head “other sources” and not ‘business income" - HELD THAT:- From the perusal of the said order it can be seen that in the earlier years, the order u/s 263 has been sustained by the Tribunal on the similar issue. In the present year as well the assessee has not demonstrate before the AO whether actual business was commenced or not and at the same time whether investment has inextricable link in respect of the project and not that of pre-operative expenses. As per the Hon’ble Delhi High Court decision in case of Indian Vaccination Corporation Ltd. [2014 (3) TMI 299 - DELHI HIGH COURT] when there is no inextricable link between investment and project, interest income on said investment could not be permitted to be adjusted against pre-operative expenses in respect of said project. The case laws referred by the assessee are not applicable in the present case as the provisions under Section 263 are properly invoked by the Commissioner of Income Tax. Therefore, the order under Section 263 of the Act passed by the Commissioner of Income Tax is just and proper. There are no two views expressed but there is a failure on part of the Assessing Officer because of which there is escapement of income.
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