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Dy. Commissioner of Income-tax Circle 1 (2) , Hyderabad Versus M/s. Celestial Bio-Labs Ltd.

2016 (2) TMI 378 - ITAT HYDERABAD

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 get away from the penalty, the CIT(A), takin .....

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d 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. In that view of the matter, we find no i .....

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d 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 ₹ 4,89,62,681 and unabsorbed depreciation of & .....

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m 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 and requested to allow the assessee to wi .....

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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 claim made, by adducing the evidence as called .....

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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 particulars of income which resulted in concealmen .....

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tion 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) (i) fails to offer an explanation; or (i .....

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see 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 amount to concealment of the particulars .....

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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 cannot absolve an assessee. .........." .....

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r 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 in the rectification proceedings under S.1 .....

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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 several disallowances in the assessment orders f .....

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