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TMI Blog2016 (3) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... ustified (for A.Y. 2007- 08) and erred (for A.Y. 2008-09) in deleting the penalty imposed U/s 271(1)(c) of the IT Act on the grounds that the assessee has made wrong claim of deduction U/s 10B on the interest income which is not an eligible income." 2. The assessee company is engaged in the business of manufacturing and exporting of granite and other natural stone slabs and tiles. The assessee filed return for A.Y. 2007-08 on 31/10/2007 declaring total income of 1,84,80,180/- and for A.Y. 2008-09 it filed return on 29/09/2008 declaring total income of Rs. NIL. Both the cases were scrutinized U/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as the Act). In A.Y. 2007-08, the assessee had shown income from FDR and NSC at Rs. 32,9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isfied that any persons has concealed the particulars of his income or furnished inaccurate particulars of such income or where in respect of any facts material to the computation of total income of any person under this Act, such person fails to offer an explanation or offers an explanation, which is found by the Assessing Officer to be false, or such person offers an explanation, which he is not able to substantiate and fails to prove that such explanation is bonafide and that all the facts relating to the same and material to the computation of his total income had been disclosed by him, then the case of the assessee comes within the purview of Section 271(1)(c) of the Act. The ld Assessing Officer relied upon the Hon'ble Supreme Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Textile Processors (306 ITR 277) and levied penalty u/s 271(l)(c). It is, however, also noted that there is no discussion regarding assessee's submissions in this regard in the penalty order. 4.1 It may be mentioned here that the decision of the Hon'ble Supreme Court in the case of Dharmendra Textile (supra) does not imply that penalty has to be automatically levied whenever a claim made by the assessee is denied. It is correct that mens rea need not be established for imposing penalty. The AO still has to establish that the assessee has furnished inaccurate particulars of income or concealed its income. In the case before us it is seen that the appellant had made a claim of exemption u/s 10B on certain income which was not found to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following cases:- (i) CIT Vs. Nahva Sons Investments Ltd. 327 ITR 543 (Del.) (HC). (ii) CIT Vs. Jindal Polyster & Steel Ltd. (2014) 365 ITR 225 (All.) (HC) (iii) CIT Vs. Torque Pharmaceuticals Pvt. Ltd. (2015) 124 DTR 356 (Chd.) (Trib.) (iv) ACIT Vs. Tupperware India Pvt. Ltd. (2012) 34 CCH 59 (Del.) (Trib.). (v) Citi Tiles Ltd. Vs. DCIT (2013) 37 CCH 123 (Ahd.) (Trib.) He has further submitted that there is no dispute as to the fact that the assessee is eligible to claim exemption u/s 10B of the Income Tax Act, 1961. The only issue is whether the assessee is eligible for claim of such exemption on the interest receipt. The fact that assessee has claimed exemption u/s 80IB on interest receipt on FDR/NSC is evident from the cop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecause the claim of exemption u/s 10B is reduced, can't be held to be concealment of income or furnishing of the inaccurate particulars of income. It is a settled law that mere disallowance or rejection of legal claim does not tantamount to concealment of income. For this reliance is placed on the following cases:- CIT v. Harshvardhan Chemicals & Minerals Ltd. (2003) 259 ITR 212 (Raj): (i) CIT Vs. Haryana Education Society (2001) 251 ITR 846 (P & H) (ii) ACIT Vs. Concept Creations (2010) 40 DTR 147(Del) (Trib) (iii) CIT Vs. Raj Overseas 336 ITR 261 (P&H) (HC) (iv) CIT Vs. Oriental Power Cable Ltd. 303 ITR 49 (Raj):- Otherwise also, even after not allowing the claim of exemption u/s 10B on interest income, the effect in the reductio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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