TMI Blog2011 (12) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of Ld. CIT(A) dated 17th May, 2010 passed for asstt. year 2000-01. The solitary grievance of the revenue is that Ld. CIT(A) has erred in deleting the penalty of RS.1,39,42,002/- imposed u/s 271(1)(c) of the Income Tax Act. 2. The brief facts of the case are that assessee is an undertaking of Govt. of India. It came into existence by way of National Cooperative Development Corporation Act 1962 (No. 26 of 62). It is engaged in the business of providing long term finance to the State Govt. and Cooperative Societies in all these States. For Asstt. Year 2000-01, it has filed its return of income on 21.11.2000 declaring an income of Rs.28,33,52,920/-. It was processed u/s 143(1) on 26th March, 2001. The AO had formed an opinion that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been remitted back to the file of AO for computing the disallowance after considering overhead expenses relatable to earning such receipts. 4. The AO has initiated proceeding u/s 271(1)(c). He issued a show cause notice u/s 274 read with section 271(1)(c) inviting assessee s explanation as to why penalty be not imposed. In response to the show cause notice, it was contended by the assessee that it has been claiming a similar deduction right from asstt. Year 1994-95. It was always allowed by the AO. First time it was disallowed in 1999-2000. The AO has visited the assessee with the penalty in asstt. year 1999-2000. The assessee further contended that it has disclosed all the facts in the return of income as well as in the audited accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in tabular form exhibiting the details of dividend on investment, miscellaneous receipts, service charges, interest on advance deposits and interest on bank account right from asstt. year 1994-95 upto 1999-2000. He pointed out that all along in the past, deduction u/s 36(1)(viii) has been allowed to the assessee by different AOs in scrutiny assessment passed u/s 143(3). Thus, assesse in the present year has a prime facie belief that deduction u/s 36(1)(viii) would be admissible to it on such income. It has disclosed all the basic facts truly and correctly. It has not concealed any particulars or furnished any inaccurate particulars. It is the AO who has to assess the true income of assessee on the basis of these very details. It is a differ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the relevant provisions of section 271(1)(c) along with Explanation 1 which read as under: 271. Failure to furnish returns, comply with notices, concealment of income, etc. (1). If the Assessing Officer or the Commissioner (Appeals) or the CIT in the course of any proceedings under this Act, is satisfied that any person (a) and (b)******** (c) has concealed the particulars of his income or furnished inaccurate particulars of such income. He may direct that such person shall pay by way of penalty. (i) and (Income-tax Officer,)******** (iii) in the cases referred to in Clause (c) or Clause (d), in addition to tax, if any, payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income or furnishing inaccurate particulars. The other most important features of this section is deeming provisions regarding concealment of income. The section not only covered the situation in which the assessee has concealed the income or furnished inaccurate particulars, in certain situation, even without there being anything to indicate so, statutory deeming fiction for concealment of income comes into play. This deeming fiction, by way of Explanation I to section 271(1)(c) postulates two situations; (a) first whether in respect of any facts material to the computation of the total income under the provisions of the Act, the assessee fails to offer an explanation or the explanation offered by the assessee is found to be false by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esenting the income in respect of which inaccurate particulars have been furnished. 11. The assessee has disclosed all the facts fully and truly. It is not the case of AO that assessee has furnished inaccurate particulars. From the details submitted by the assessee, AO has formed an opinion in a reassessment proceeding that certain receipts does not qualify for inclusion for the purpose of computation of deduction admissible u/s 36(1)(viii). The AO himself allowed deduction to the assessee from asstt. Year 1994-95 upto 1998-99. In 1999-2000, assessment was reopened and thereafter deduction was disallowed to the assessee for the first time. But the penalty imposed on similar circumstance was deleted by the Ld. CIT(A). The revenue was not p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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