TMI Blog2015 (5) TMI 891X X X X Extracts X X X X X X X X Extracts X X X X ..... t filing of inaccurate particulars by concealment of income by increasing the expenses of non STP unit vis-ŕ-vis STP units. The assessee has deliberately inflated the expenses of taxable units keeping in mind that this issue was not accepted in earlier assessment years yet the assessee took a chance because it was well aware that hardly 2-3% of the returns are selected for scrutiny assessment, which means that such persons can make irregular and excessive claim of the nature of the case in hand and would get away without paying the tax legally payable by them, if their cases are not picked up for scrutiny, thereby discriminating with the good taxpayers and law abiding tax payers. Such inequity takes away deterrent effect from the penal provisions which have been enacted in the Act. As decided in Reliance Petroproducts (2010 (3) TMI 80 - SUPREME COURT ) has held that everything would depend upon the return filed because that is the only document, where the appellant can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability of penalty u/s. 271(1)(c) would arise. In the instant case, the assessee has repeatedly claimed the skewed al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perception of profits derived from the said unit, which among others, included bonafide belief that the word, delivered would keep outdo the ambit of such determination not only income but also expenditure which did not have direct and close proximity with the eligible unit. Section 10A unfortunately does not provide any guidance in the matter. However, the basis of computing the profits was explained by way of note to the computation of 10A profits. During the assessment proceedings for assessment year 2007-08, the AO had chosen to modify the basis for arriving at such profits. In the appeal there against the CIT(A) had made further modifications thereto. The company is in appeal to the Tribunal there against. As a practical measure and in order to avoid protracted litigation on a largely factual matter involving a substantial degree of estimation, it was felt that it would be in the interests of the company to accept the methodology of estimating profits which found favour with the CIT(A). Accordingly, in assessment year 2007-08 we filed revised claim in which the amount of deduction u/s. 10A was reworked whereby we had allocated common expenses incurred at locations other t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posing penalty u/s. 271(1)(c) of the Act at ₹ 71 lakhs. 5. Aggrieved by this, the assessee carried the matter before the Ld. CIT(A) and reiterated what has been submitted before the lower authority. After considering the facts and the submissions, the Ld. CIT(A) observed that it is not in dispute that the assessee company has furnished inaccurate particulars of income knowing fully well that in the eafrlier years for A.Yrs 2006-07 and 2007-08, the claim of excessive deduction u/s. 10A had been rejected by the department. The assessee was clearly told to allocate the common expenses between STP unit and the non STP unit on the basis of turnover, yet the assessee continued its furnishing of inaccurate particulars of income by claiming excessive deduction u/s. 10A of the Act. The Ld. CIT(A) further observed that only a small percentage of the income tax returns are picked up for scrutiny the AO. If the assesses make a claim which is not only incorrect in law but is also unsubstantiated and the explanation furnished by the assessee for making such a claim is not satisfactory, it would be difficult to say that they would still not be liable to penalty u/s. 271(1)(c) of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 008, prior to this return for A.Y. 2006-07 and 2007-08 were also subject to scrutiny assessment and during the course of the scrutiny assessment of these two assessment years, the allocation of expenses between the STP unit and the non STP unit was the contentious issue. Thus, it can be safely concluded that when the assessee has filed the return for the year under consideration, it was well aware of the view taken by the department in earlier assessment years, in so far as the allocation of expenses is concerned, yet the assessee did not allocate the expenses in the manner in which they were allocated in the earlier assessment years by the AO. 9.2. The claim of the assessee that it received the appellate order for A.Y. 2006-07 after filing the return is not acceptable for the simple reason that the assessee was well aware of the contentious issue of earlier assessment year just because the AO did not levy penalty in earlier assessment year does not exonerate the assessee from the levy of penalty for the year under consideration. 9.3. This is the third year of allocation of expenses therefore it cannot be said that the assessee was not aware of the allocation of expenses, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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