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The Deputy Commissioner of Income Tax, Circle 11 (3) , Bangalore and others Versus M/s. e-Cosmos India Pvt. Ltd. and others

2015 (7) TMI 336 - ITAT BANGALORE

Penalty u/s. 271(1)(c) - disallowance of deduction u/s. 10A of the Act and disallowance of ₹ 10 lakhs of administrative selling and other expenses - filing return of income belatedly - Penalty imposed was cancelled by the CIT(A) - Held that:- The conduct of the assessee in filing return of income belatedly is sufficiently explained before the CIT(A). Perusal of the orders of the AO while concluding assessment u/s.143(3) of the Act shows that it was only the director who attended proceeding .....

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4 of the Act before imposing penalty u/s. 271(1(c) of the Act. In our view, this cannot be the basis to impose penalty as the penalty is with reference to concealment of particulars of income or furnishing of inaccurate particulars of income with reference to the original assessment proceedings.

As far as the complaint of the Revenue that the assessee furnished inaccurate particulars by making wrong claim of deduction u/s. 10A of the Act is concerned, we find that this is not the basi .....

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on that assessee is guilty of having furnished inaccurate particulars of income or having concealed particulars of income. The CIT(A) has rightly placed reliance on the decision of the Hon’ble Supreme Court in Reliance Petro Products Pvt. Ltd. (2010 (3) TMI 80 - SUPREME COURT ).

Even with regard to adhoc disallowance of administrative selling and other expenses of ₹ 10 lakhs, disallowance has been made only for want of bills & vouchers. There is nothing on record to suggest that .....

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by the Revenue against the order dated 30.6.2014 of the CIT(Appeals)-I, Bangalore relating to assessment year 2009-10. In this appeal, the Revenue has challenged the order of CIT(Appeals), whereby he cancelled the order of the Assessing Officer imposing penalty u/s. 271(1)(c) of the Act. 2. Penalty u/s. 271(1)(c) of the Act was imposed by the Assessing Officer under the following facts. The assessee is a company, engaged in the business of computer software development. The assessee filed its r .....

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provisions of proviso to section 10A(1A) and also for the reason that From 56F in the prescribed proforma which is necessary for claiming deduction u/s. 10A had not been filed by the assessee, deduction u/s. 10A was disallowed by the AO. The AO also noticed that in the P&L account, administrative selling and other expenses debited by the assessee were a sum of ₹ 3,66,31,715. In the course of assessment proceedings, the director of the company appeared before the AO. He was asked to pr .....

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naccurate particulars of income and concealed particulars of income and imposed penalty equal to 100% tax sought to be evaded. 5. Before the CIT(Appeals), the assessee firstly submitted the reason why the return of income was not filed on or before the due date u/s. 139(1) of the Act. The assessee had explained before the CIT(A) in an affidavit that the assessee faced several odds due to crash in the business following economic meltdown in the USA where its business was concentrated, leading to .....

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n u/s. 10A was owing to technical lapse and there could be no doubt that assessee was engaged in the business of computer software and had brought in to the country foreign exchange from such export. The assessee submitted that it had disclosed facts in its return of income and there could be no complaint of any concealment of particulars of income or furnishing of inaccurate particulars of income. 7. With regard to disallowance of ₹ 10 lakhs out of administrative selling and other expense .....

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l not necessarily lead to concealment of particulars of income, when all facts are disclosed and the claim is made for deduction. It was held that it was upto the authorities to accept or reject the claim for deduction. Merely because the deduction claimed is not accepted, will not by itself attract imposition of penalty u/s. 271(1(c) of the Act. 9. The CIT(Appeals) on a consideration of the aforesaid facts, firstly came to the conclusion that there was a reasonable cause for the assessee in fil .....

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ature. The CIT(A) therefore was of the view that the assessee cannot be said to be guilty of having furnished inaccurate particulars of income or having concealed the particulars of income. Penalty imposed was cancelled by the CIT(A). 10. Aggrieved by the order of CIT(Appeals), the Revenue has filed the present appeal before the Tribunal. 11. The ld. DR reiterated the stand of the Revenue as contained in the grounds of appeal filed before the Tribunal. According to the Revenue, conduct of the as .....

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n of income belatedly is sufficiently explained before the CIT(A). Perusal of the orders of the AO while concluding assessment u/s.143(3) of the Act shows that it was only the director who attended proceedings of assessment before the AO. In our view, the explanation so offered by the assessee deserves to be accepted. In this regard, the CIT(A) has also noticed the fact that the IT industry was undergoing a recession phase at the relevant point of time. The complaint that there was non-cooperati .....

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ngs. 14. As far as the complaint of the Revenue that the assessee furnished inaccurate particulars by making wrong claim of deduction u/s. 10A of the Act is concerned, we find that this is not the basis on which deduction u/s. 10A was denied to the assessee. As rightly contended by the assessee, deduction u/s. 10A was denied only for technical reasons viz., return of income not having been filed on or before the due date u/s. 139(1) of the Act. In our view, therefore, the contentions put forth b .....

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