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2016 (2) TMI 378 - ITAT HYDERABAD

2016 (2) TMI 378 - ITAT HYDERABAD - TMI - Penalty under S.271(1)(c) - deduction under S.10A - CIT(A) allowed the appeal of the assessee for statistical purposes - Held that:- Contention of the assessee right from the beginning against the penalties proposed is that the said claims under S.10A were made on account of typographical errors and incorrect advice of the Chartered Accountant. Even though the CIT(A) observed that this passing on of the blame on to the Chartered Accountant was only to ge .....

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in each of these years, the CIT(A) allowed the appeals of the assessee for statistical purposes. No material has been brought on record to controvert the finding of the CIT(A) that if the deductions under S.35(2AB) and S.35(1) are allowed for the years under appeal, the assessable income would be nil, and consequently, the penalty imposable would also be ‘nil’. When there is no variation to the total income determined, machinery provisions for calculation of ‘tax sought to be evaded’ would fail .....

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sioner of Income-tax(Appeals) II, Hyderabad dated 3.1.2014, deleting the penalties levied under S.271(1)(c) of ₹ 1,64,80,838 for assessment year 2007-08 and of ₹ 1,66,42,414 for assessment year 2008-09. 2. Facts of the case in brief, as taken from the appeal file for the assessment year 2007-08, are that the assessee company is in the business of Bio-technology. It filed its return declaring nil income for the assessment year 2007-08 after claiming deduction under S.10A of ₹ 4, .....

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c) Invoice copies of exports d) FIRCs from Banks etc. Assessee failed to produce the requisite details called for, and instead filed revised computation of income withdrawing deduction claimed under S.10A stating that the export sales were not realized and instead claimed relief under S.35(2AB) of the Act. The Chartered Accountant for the assessee also filed a letter dated 15.12.2010 stating that due to typographical error, claim under S.10A was made for both assessment years 2007-08 an 2008-09 .....

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to the penalty notice, assessee explained that the claim for deduction under S.10A was claimed as per the advice of its Tax Counsel, and a soon as it was realised during the course of assessment proceedings, that due to non-reasliation of the export sale consideration, such advice of the counsel was not correct, and it was not advised of the fact that it should obtain RBI approval for non-realization of the Export proceeds as stipulated in the Act. Thus, as it was unable to substantiate the clai .....

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, summarized by the CIT(A) in the impugned order, imposed the penalty of ₹ 1,64,80,838, vide order dated 29.6.2011 passed under S.271(1)(c) of the Act. a) The assessee did not withdraw the 10A claim on his own. It is , only when the Department called for details of STPI registration, annual returns submitted before the STPI, invoices copies of exports, etc., as the assessee could not produce these evidences he withdrew the claim of 10A deduction. Therefore, he furnished inaccurate particul .....

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ame its Auditors by stating that l0A deduction was claimed as advised by the Tax Counsel. e) That the assessee could have filed revised return by withdrawing l0A deduction after completion of summary assessment or even after issue of notice ujs.l48. But he has not done so. f) Had the case not been converted to scrutiny, the claim of the assessee might have been allowed without any verification. g) As per Explanation (1) to section 271(1)(c), the assessee is deemed to have concealed income if- (a .....

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e one. Thus it is a clear case where assessee intentionally furnished inaccurate particulars of income. i) The Assessing Officer relied on the following decisions - a. CIT vs. India Sea Foods (1976) 105 ITR 708 (Ker) wherein it was held that - "falsehood in accounts can take either of the two forms; either en item of receipt may be suppressed fraudulently, or an item of expenditure may be falsely (or in exaggerated amount) claimed. Both types attempt to reduce the taxable income. Both types .....

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held that - "The law on the subject of treating a revised return of income as voluntary or otherwise is well settled. Merely because of return is revised that fact by itself cannot lead to any presumption as to concealment in the.cortqinet return of income, because the Legislature itself has provided for furnishing a revised return in case of any omission in the original return. Albeit such omission has to be inadvertent and bona fide. - If the omission is intentional the revised return ca .....

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35(2AB). The said claim for deduction under S.35(2AB) was originally rejected by the Assessing Officer for want of Form No.3CL. The CIT(A), in separate proceedings u/s154, vide his order dated 1.1.2014 held that the Assessing Officer should allow deduction under S.35(2AB) at 150% of the amount determined by the prescribed authority. The Assessing Officer was also directed to examine the details of expenses incurred under S.35(1)and allow the same. Referring to his appellate order dated 1.1.2014 .....

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2AB) involved -so also the amounts of the incomes returned, assessed and penalty imposedfacts are identical for the assessment year 2008-09 as well, and as such the same need not be narrated over again. 7. Aggrieved by the orders of the CIT(A) for both the years, Revenue has preferred the present appeals before us. 8. We have considered the rival submissions and perused the orders of the Revenue authorities and other material available on record. Even though the Assessing Officer has made severa .....

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