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2016 (3) TMI 16 - ITAT JAIPUR

2016 (3) TMI 16 - ITAT JAIPUR - TMI - Penalty imposed U/s 271(1)(c) - assessee has made wrong claim of deduction U/s 10B on the interest income which is not an eligible income - Held that:- The assessee had furnished details of interest in return and in audit report, therefore, no particulars of income have been concealed. The matter is debatable on the deduction U/s 10B is allowable on interest income or not, as such, the assessee had claimed that these receipts are directly linked with the exp .....

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ssessment and thereafter the case is assessed U/s 115JB and finally tax paid by the assessee on the basis of Section 115JB of the Act. The concealment on account of any regular assessment, does not lead to evade the tax at all. Therefore, penalty U/s 271(1)(c) is not justified. In this year also, the assessee has disclosed all the particulars of income in return alongwith audit report. The matter is whether interest income has direct nexus with the export business or not. Therefore, we uphold th .....

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ommon effective ground of both the appeals are as under:- Whether on the facts and in the circumstances of the case and in law the ld CIT(A) was justified (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 na .....

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n U/s 10B of the Act on it. The Assessing Officer in quantum addition had observed that these receipts were not business income and cannot be treated as income derived from the export business. Therefore, deduction U/s 10B was not allowed in both the years on the receipt. The ld CIT(A) in both the years have confirmed the addition made on account of interest not considered as derived income for computing deduction U/s 10B. Before imposing penalty U/s 271(1)(c) of the Act, he gave reasonable oppo .....

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culars of income and showing less business profit which led to concealment of income and penal action U/s 271(1)(c) of the Act. The ld Assessing Officer also considered the case law relied upon by the assessee. He further reproduced Section 271(1)(c) in both the years in penalty order. After considering all facts and legal position, the ld Assessing Officer held that if the Assessing Officer is satisfied that any persons has concealed the particulars of his income or furnished inaccurate particu .....

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hen 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 Court decision in the case of Dharmendra Textile Processors & Others (2008) 306 ITR 277 (SC) wherein it has been held that penalty proceeding are no longer quasi criminal proceedings and hence, the presence of mens rea is not required to be established. The addition has been confirmed by the ld CIT(A) and the assessee had claimed excess deduction .....

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bmissions made by the appellant and have also gone through the order of the AO. It is noticed that the assessee is engaged in the business of manufacturing and export of granite and other natural stones and tiles. The assessee had shown income from FDRs and NSEs and had claimed deduction u/s 10B on this income. It was held by the AO that deduction u/s 10B cannot be allowed on the income from FDRs and NSEs. This order of the AO was upheld by the CIT(A) as well as the Hon ble ITAT. The Assessing O .....

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s 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 in accordance with the provisions of the I.T. Act and the claim of exemption on this amount wa .....

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e case, the levy of penalty of 271(l)(c) appears to be unjustified and is, accordingly, cancelled. Similar findings have been given in A.Y. 2008-09 by the ld CIT(A). 4. Now the revenue is in appeal before us. The ld DR has vehemently supported the order of the Assessing Officer and further argued that interest income is not derived income from the export business and does not have direct nexus with the export business. Therefore, the assessee is liable to be imposed penalty U/s 271(1)(c) of the .....

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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 .....

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Ltd. 293 ITR 524 (Mad.) (HC) (iii) CIT VS. Lotus Trans Travels (P) Ltd. 177 Taxman 37 (Del.) (HC) The ld AR has further submitted that the assessee filed the return on 29.09.2008. On this date there were judgments in favor of the assessee allowing the claim of exemption u/s 10B by considering that after considering the interest expenditure, there is no interest income. In assessee s own case, the CIT(A) in A.Y. 2005-06 vide its order dated 30- 07-2008 in ITA No.736/07-08 has allowed the claim of .....

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ecided in favor of the assessee. Further the AO himself has not levied any penalty in A.Y. 2005- 06 & 2006-07 on the same facts. Hence only because 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 & Mi .....

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