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2015 (12) TMI 453 - ITAT MUMBAI

2015 (12) TMI 453 - ITAT MUMBAI - TMI - Penalty u/s. 271(1)(c) - disallowance of deduction u/s. 80IA(4) - CIT(A) deleted the penalty - Held that:- Claim made by the assessee at the time of filing of return was a bonafide claim and based upon one of the possible views, as per law prevailing at the time of filing of return. With the objective of bringing its return in line with the amended law, as per the amendment made in section 80IA(4), the assessee had filed its revised computation of income d .....

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ecision of CIT vs Hindustan Electro Graphite Ltd [2000 (3) TMI 2 - SUPREME Court ] because the return was filed on 29.11.2006, before the amendment was made by the Finance Act, 2007 and approved by the Hon'ble President of India on 12.5.2007, with retrospective effect from 1.4.2000. Moreover, on the basis of retrospective amendment, the assessee had revised its computation during the assessment proceedings and withdrawn the deduction claimed u/s 80IA(4). Thus it was not a fit case for levying pe .....

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mbai {In short, CIT(A) }, for the assessment year 2006-07 dated 01.11.2010, decided against the penalty order passed by the Assessing Officer (in short AO ) u/s 271(1)(c) of the Act. The solitary ground raised by the revenue is reproduced below: 1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in holding that penalty u/s. 271(1)(c) of the I.T. Act, 1961 is not leviable in the present case as the action of the assessee to claim deduction u/s. 80 .....

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or add a new ground which may be necessary. 2. The brief facts are that from the computation of total income, the A.O. observed that the assessee had claimed deduction u/s 80IA(4) of the Income Tax Act, 1961. However, from the details filed by the assessee the A.O. had noticed that the assessee was a sub-contractor, undertaking projects of road constructions on behalf of two main contractors i.e. M/s. Larsen & Toubro Limited for National Highway Authority of India One project at Orissa and M .....

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for furnishing inaccurate of income. A show cause notice u/s. 274 r.w.s. 271(1)(c) was issued and served by the AO on the assessee. It has been stated in the penalty order that in the penalty proceedings, none had appeared on behalf of the assessee nor any written reply was submitted, and therefore it was held by the A.O. that the assessee's case is fit for imposition of penalty u/s 271(1)(c), and accordingly, the AO levied a penalty of ₹ 2,82,84,790/- i.e. 100% of tax sought to be eva .....

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llant submits that in the case of ACIT V Bharat Udyog Ltd. ( 123 ITR TTJ 689 (TMum) it was held that assessee having entered into agreement with the Government agencies for deduction for development of projects is obviously a contract but that does not derogate the assessee from being a developer and claim for deduction under section 80-IA(4) cannot be denied. The appellant submits that the Explanation to section 80-IA was inserted to remove the doubts. The appellant submits that the insertion o .....

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.5.2007, this included retrospective amendment to section 80-IA from 01.04.2000. The amendment also provides that this is clarify the position. The amendment would not have been necessary if there was full clarity. When the matter lacks clarity and the appellant makes a possible claim, it could not be said that the appellant had concealed the particulars of its income or filed inaccurate particulars thereof. If such a view is taken, in all the cases wherein there are two possible views, and an a .....

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ncome withdrawing its claim for deduction under section 80-IA. The appellant submits that even while completing the assessment, the only reason for disallowance of claim for deduction under section 80-IA(4) is the retrospective amendment to the said provisions and relied on the following decisions: CIT V. Hindustan Electro Graphites Ltd. [( 2000) 243 ITR 48 (SC) ] Dilip N. Shroff V. Joint Commissioner of Income-tax [ (2007) 291 ITR 519(SC)] K.C. Builders V. Assistant Commissioner of Income tax [ .....

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Nil after claiming deduction u/s. 80IA at ₹ 8,40,30,860/-. The said return of income was accepted u/s. 143(1) dated 24.12.2007. Subsequently, the case was selected for scrutiny and notice u/s. 143(2) and 142(1) were issued and served on the assessee. During the course of assessment proceedings, the Assessing Officer has observed that the assessee was a sub-contractor for projects of road construction and hence not eligible for deduction u/s. 80- IA as per Explanation inserted by the financ .....

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the claim of deduction u/s. 80-IA amounting to ₹ 8,40,30,860/- and initiated penalty proceedings u/s. 271(1)(c) for furnishing inaccurate particulars of income. The assessee did not prefer any appeal against the order u/s. 143(3) dated 22.12.2008. During the course penalty proceedings u/s. 271 (1)(c), the assessee had neither attended nor furnished any written submission in response to the show cause notice / final opportunity dated 22.12.2008 and 04.06.2009. Hence, the Assessing Officer .....

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rmed this fact to the Assessing Officer. But, this was not done and the reason cited by it before your honour is an afterthought. Even during the recovery proceedings also, the assessee has not informed this fact to the Assessing Officer. The assessee furnished inaccurate particulars regarding the claim of deduction u/s. 80IA and remained intentionally silent till the same was unearthed by the Assessing Officer." 2.3. Thereafter, Ld. CIT(A) provided copy of remand report to the Assessee. In .....

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e it was held as under: "Held, dismissing the appeal, that where a return is filed the law applicable would be the law as it stood on the date of filing of the return. In the instant case, there was not even a bona fide mistake and in fact it was not a case where under some mistaken belief the assessee did not disclose the cash compensatory support received by it. It is true that income by way of cash compensatory support became taxable retrospectively with effect from April 1, 1967, but th .....

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y of section 28. When additional tax has the imprint of penalty the Revenue cannot say that levy of additional tax is automatic under section 143{1A) of the Act. If additional tax could be levied in such circumstances it will be punishing the assessee for no fault of his. That cannot ever be the legislative intent. In the circumstances of the present case, levy of additional tax taking into account the income by way of cash compensatory support was not warranted. Decision of the Madhya Pradesh H .....

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e assessee had filed its return of income on 29.11.2006, whereas Finance Act, 2007 had amended the provisions of section 80-lA with retrospective effect from 1.4.2000. The Finance Act, 2007 received the assent of the President of India, only on 12.5.2007, thus apparently, the assessee could not have visualised the retrospective amendment in the law. Moreover, the assessee had filed its return of income relying upon the decision of Mumbai bench of ITAT in the case of ACIT vs Bharat Udyog Ltd 123 .....

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ailing at the time of filing of return. With the objective of bringing its return in line with the amended law, as per the amendment made in section 80IA(4), the assessee had filed its revised computation of income during the course of assessment proceedings, withdrawing the claim of deduction u/s. 80-IA. Under these circumstances, the A.O. had held that the assesse had furnished inaccurate particulars of income by claiming deduction u/s 80-lA(4), and thereby concealed its income, and thus penal .....

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