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2015 (11) TMI 572 - ITAT DELHI

2015 (11) TMI 572 - ITAT DELHI - [2015] 42 ITR (Trib) 362 (ITAT [Del]) - Levying penalty under section 271(1)(c) - Assessing Officer held that the assessee had routed her undisclosed income in the garb of scrap sales and had also made incorrect claim of deduction in respect of the amount of alleged scrap sales - claim of the assessee for deduction under section 80-IC denied - Held that:- The assessee submitted supportive bills and vouchers to justify the receipt of amount from sale of scrap befo .....

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cts and circumstances of the case and ignoring this important fact that the assessee submitted details of ledger account, bills and vouchers during quantum appellate proceedings which cannot be ignored. Therefore, conclusion of the Assessing Officer that the assessee routed her own money earned from undisclosed sources in the garb of sale of scrap for levy of penalty under section 271(1)(c) is not sustainable. Finally, we hold that the penalty was imposed on the assessee without any justified re .....

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been preferred by the assessee against the order of the Commissioner of Income-tax (Appeals)-XXVI, New Delhi dated December 17, 2012 pertaining to the assessment year 2008-09 by which penalty order dated December 20, 2010 passed under section 271(1)(c) of the Income-tax Act, 1961 has been upheld and penalty has been confirmed. 2. The sole ground raised by the assessee in this appeal reads as under : "1. That the hon'ble Commissioner of Income-tax (Appeals) has erred on facts and in law .....

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on under section 80-IC of the Act equal to the net 100 per cent. of the profit. During the course of assessment proceedings, the Assessing Officer found that in the miscellaneous income, the assessee had shown a sum of ₹ 16,28,174 on account of sale of scrap and a sum of ₹ 33,674 on account of interest. The Assessing Officer asked the assessee to produce the bills in respect of scrap sales but the assessee failed to produce the same to support his claim. Therefore, the Assessing Offi .....

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rtaining to sale of scrap and interest. 4. Subsequently, the Assessing Officer initiated penalty proceedings and after affording due opportunity of hearing for the assessee, the Assessing Officer concluded that the explanation and citations relied on by the assessee are not acceptable and he is satisfied that the assessee has concealed true particulars of her income and has furnished inaccurate particulars of her income and, therefore, the assessee is liable to penalty under section 271(1)(c) of .....

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h sides and carefully perused the relevant material placed on record. Learned counsel for the assessee submitted that as per the decision of the hon'ble High Court of Madras in the case of Fenner (India) Ltd. v. CIT (No. 2) [2000] 241 ITR 803 (Mad), the profit from sale of scrap is eligible for deduction under section 80HH of the Act, therefore, in the similar set of facts and circumstances of the present case, the amount earned from sale of scrap should have been allowed as deduction under .....

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ed that where two views are possible and the issue is debatable, even if claim of the assessee for deduction is disallowed, then also penalty is not leviable under section 271(1)(c) of the Act. Learned counsel further pointed out that in the preceding assessment year, i.e., assessment year 2007-08 in the assessment order under section 143(3) of the Act dated December 11, 2009, the Assessing Officer accepted and allowed the amount of sale of scrap which is incidental having direct nexus with the .....

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leviable. Learned counsel pointed out that these observations of the Assessing Officer are factually incorrect as the assessee was not afforded due opportunity of hearing during the assessment proceedings and therefore during first appellate proceedings before the Commissioner of Income-tax (Appeals), the assessee submitted an application under rule 46A of the Income-tax Rules, 1962 with additional evidence wherein the assessee submitted written submissions along with ledger account of miscella .....

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ed counsel finally submitted that the penalty imposed without any justified and cogent reason and upheld by the Commissioner of Income-tax (Appeals) does not survive and therefore, the same may be directed to be deleted. 8. Replying to the above, the learned Departmental representative supported the orders of the authorities below and submitted that since despite sufficient opportunity, the assessee could not produce relevant bills and vouchers supporting the amount of sale of scrap, therefore, .....

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her income and has concealed true particulars of her income and, therefore, under Explanation 1 to section 271(1)(c) of the Act, the penalty was rightly imposed by the Assessing Officer and the Commissioner of Income-tax (Appeals) was quite justified in confirming the same. 9. On a careful consideration of the above submissions, at the very outset, we note that although the assessee could not produce bills and vouchers pertaining to the sale of scrap but the same details was submitted by the as .....

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-08 which was of ₹ 5 lakhs was also accepted by the Assessing Officer in the order dated December 11, 2009 passed under section 143(3) of the Act, therefore, similar kind of claim which could not be supported by way of bills and vouchers during the subsequent year cannot be held as concealment of particulars of income or furnishing of inaccurate particulars of income of the assessee, especially when the required explanation/bills and vouchers were submitted subsequently before the Commissi .....

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with the allowability of deduction of section 80-IC of the Act towards the profits from sale of scrap earned by the assessee during the year under consideration, therefore, this issue is academic to the present case. At the same time, from the assessment order for the assessment year 2007-08, we note that the Assessing Officer has not disputed the amount of ₹ 5 lakhs which was earned by the assessee from sale of scrap and although the Assessing Officer has denied deduction under section 80 .....

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