TMI Blog2012 (9) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... i B. Ramakotaiah, JJ. Assessee by: Shri S.E. Dastur Department by: Shri P.B.K. Menon, DR O R D E R Per B. Ramakotaiah, A.M. These are the two appeals filed by assessee against the orders of penalty under section 271(1)(c) levied for the assessment years 2001-02 and 2002-03 and confirmed by the CIT (A)-9 Mumbai in respective assessment years vide the orders dated 29.09.2009. Assessee raised main ground with reference to the imposition of penalty with various arguments in the ground and as an abundant precaution, also raised additional grounds in clarification of the original grounds incorporating one of the contention that the penalty proceedings were initiated on one ground, whereas the penalty was levied on another reason. All the grounds raised are with reference to the levy of penalty under section 271(1)(c). Therefore, the this issue considered in these two appeals. 2. The relevant facts of the case are that assessee had filed returns of income in respective years declaring nil income after claiming deduction under section 80HHC. The claim in assessment year 2001-02 was to the extent of Rs.24,47,393/- under section 80HHC and Rs.9,45,131/- in assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnishing inaccurate particulars , whereas the penalty was finalized on concealment of income . He referred to the various details filed, audit reports and the order of AO in assessment to submit that the complete details were furnished along with the return and AO has only excluded the amounts at the time of computation of income thereby denying the deduction under section 80HHC. He then submitted that even though assessee has reflected the amount under the head export commission , the nature of the amount was re-assortment charges and service charges received for sorting out the diamonds on the basis of colour, clarity and carat size and referred to the various invoices and certification of the Bank at the time of remittance of foreign exchange to submit that the actual nature of the amount was in the nature of service charges in the course of export business. Therefore, mere nomenclature as export commission per se does not mean that it has to be the income to be excluded under Explanation (baa). It was further submitted that assessee ought to have contested the action of AO but on the advise of the then C.A, issues were not pursued. But before the CIT (A) in the course of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... give any valid explanation in the course of penalty proceedings as the C.A. who was dealing assessee s case migrated to London and at the relevant point of time there was no authorized person to represent assessee and accordingly no explanation was furnished. It was also further submitted that assessee had explained the nature of income and why the claim was made at the time of filing the return before the CIT (A), but these were not considered by the CIT (A). 5. The learned DR however, submitted that assessee has not challenged the said disallowance made in the assessment and there was no explanation from assessee why the export commission was claimed. Except a passing reference to the assortment charges, no details were filed before AO and the penalty was validly levied as the claim cannot be allowed and assessee has accepted. The learned DR also distinguished the case law relied upon by assessee and supported the findings of AO that there was deliberate and conscious decision of assessee to furnish inaccurate particulars thereby, not paying the taxes. 6. We have considered the issue, rival contentions and examined the record. As far as the contention that the penalty was in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 47,393 13 Deduction under section 80HHC to which assessee entitled. Rs.24,47,393 Vide statement X, assessee arrived at profit from export of manufacturing goods at Rs.16,43,828/- (A), profit from trading Rs..2,82,590/-(B), and export incentives at Rs.11,32,823/-(C). The total of the three (A+B+C) was to the extent of Rs.30,59,241/- and claim was at 80% there on Rs.24,47,393/-. In the assessment AO simply excluded the so called export commission from the profits of business and included under the head other income for exclusion at 90% under Explanation (baa) thereby the profits and gains of export of manufacturing goods was worked out at a loss of Rs.44,63,201/-. There is no change in profits from trading goods and since A+B was loss, 90% of the incentives were ignored thereby the claim was rejected. At the time of completion of the assessment, the decision of the Hon'ble Supreme Court in IPCA Laboratories 266 ITR 521(SC) was rendered, thereby AO ignored the benefit of section 80HHC on the export incentives as there was a loss in manufacturing / trading activity connected with the export as per his working. This is only shows that assessee s claim can ..... X X X X Extracts X X X X X X X X Extracts X X X X
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