TMI Blog2014 (1) TMI 177X X X X Extracts X X X X X X X X Extracts X X X X ..... hat assessee is a 100% exporter and has no domestic business, has not been disputed – the order for penalty u/s 271(1)(c) of the Act set aside – Decided in favour of Assessee. - ITA No. 3288 /Del/ 2011 - - - Dated:- 24-5-2013 - Shri R. P. Tolani And Shri T. S. Kapoor,JJ. For the Appellant : Shri Ved Jain CA For the Respondent : Shri Bhim Singh Sr. DR ORDER Per R. P. Tolani, J.M:- This is assessee's appeal against CIT(A)'s order dated 18-03-2011 challenging sustenance of penalty of Rs. 3,29,520/- imposed u/s 271(1)(c) of the Income-tax Act, 1961 relating to assessment year 2004-05 qua the calculation of deduction u/s 80-HHC. 2. The assessee is a company, engaged in 100% export. Its entire sales are export sales as is e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars are furnished. (iv) The issue is of denial of a deduction qua business income declared during survey, which is an issue of debate and interpretation. (v) The issue is debatable and hence no penalty is leviable. 2.2. The AO rejected assessee's explanation and levied penalty, holding that it is a case of deliberate default and relied on Hon'ble Punjab Haryana High Court decision in the case of National Legguard Works 288 ITR 18, holding that surrendered income is to be treated as income from other sources and not business income from export. 2.3. Aggrieved, assessee preferred first appeal, where the CIT(A) confirmed the action of assessing officer, levying penalty. 2.4. Aggrieved, assessee is before us. 2.5. Ld. Counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock valuation found during the course of survey and surrendered as business income during assessment year was held to be relatable to business profit, eligible for deduction u/s 80-HHC. This was a case of quantum addition and not penalty. Thus, in quantum addition there exists two different views between Punjab Haryana High Court and Rajasthan High Court and both judgments are rendered much after the financial year and thus it cannot be implied that assessee acted in deliberate defiance of these judgments. Rather it indicates the fact that there was waging dispute between assessee and tax authorities in respect of head of such income. Similarly, Hon'ble Calcutta High Court in the case of CIT Vs. Margarel's Hope Tea Co. 201 ITR 747 (Cal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Zoom Communication Pvt. Ltd. (supra) is not applicable to assessee's case and clearly distinguishable. Further Zoom Communication Pvt. Ltd.'s case has been dealt with by the Hon'ble Delhi High court in the case of CIT Vs. Mahanagar Telephone Nigam Ltd. ITA no. 626/2011 dated 10-10-2011, wherein the Hon'ble High Court rejected the revenue's arguments for imposition of penalty based on Zoom Communication Pvt. Ltd.'s case and relied on Hon'ble Supreme Court's judgment in the case of Reliance Petroproducts Ltd. (supra). It was held that if all the relevant facts are disclosed in the return of income and claims are made under bona fide belief, they cannot be subjected to penalty. In Mahanagar Telephone Nigam Ltd.'s case (supra), eve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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