TMI Blog2013 (9) TMI 1105X X X X Extracts X X X X X X X X Extracts X X X X ..... A) was right in deleting the penalty of ₹ 7,40,38,379/- levied u/s 271 (1) (c) by the AO on the addition of ₹ 20,22,09,664/- made on account of sale tax subsidy by treating it as revenue receipt as against capital receipt declared by the assessee in view of the judgment of Hon'ble High Court in Abhishek Industries Ltd., despite the fact that the claim of the assessee that sale tax subsidy was capital receipt was not accepted by the CIT (Appeal) and Hon'ble ITAT in appeal by the assessee against quantum addition. 3. The ground of appeal raised by the Revenue in ITA No.71/Chd/2012 reads as under: 1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was right in deleting the penalty of ₹ 8,80,74,063/- levied u/s 271 (1) (c) by the AO on the addition of ₹ 26,16,57,943/- made on account of sale tax subsidy by treating it as revenue receipt as against capital receipt declared by the assessee in view of the judgment of Hon'ble High Court in Abhishek Industries Ltd., despite the fact that the claim of the assessee that sale tax subsidy was capital receipt was not accepted by the CIT (Appeal) and Hon'ble ITAT in appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be a revenue receipt of the assessee company. This revenue receipt has been misclassified by the assessee to suppress their lawful income. Therefore, an addition of ₹ 20,22,09,664/- is being made to the total income of the assessee. 7. Penalty proceedings u/s 271(1)(c) of the Act were initiated. The addition made by the Assessing Officer was confirmed by the CIT (Appeals) and thereafter show cause notice was issued to the assessee and penalty u/s 271(1)(c) of the Act was levied at ₹ 7.40 crores. 8. The CIT (Appeals) after considering the reply of the assessee, which is incorporated under para 4.1 at pages 2 to 9 of the appellate order observed that when the assessee has concealed particulars of his income or furnished inaccurate particulars, conditions laid down in explanation (1) (supra) have to be examined. The CIT (Appeals) after considering the issue of levy of penalty on the addition of ₹ 20,22,09,664/- on account of sales tax subsidy observed as under: The Assessing Officer has levied the penalty on the addition of ₹ 20,22,09,664/- on account of sales tax subsidy by treating it as revenue receipt as against capital receipt declared by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee pointed out that pursuant to the decision of Hon'ble Punjab Haryana High Court in CIT Vs. Abhishek Industries Ltd. (supra) SLP against the said decision had been admitted by the Hon'ble Apex Court and the same is pending. It was the contention of the learned A.R. for the assessee that the same reflects that the issue is debatable and on addition made on the basis of such debatable issue, there was no merit in levying of penalty u/s 271(1)(c) of the Act. It was further pointed out by the learned A.R. for the assessee that the quantum appeals against the addition confirmed by the Tribunal in the case of the assessee were pending before the Punjab Haryana High Court. The learned A.R. for the assessee further contended that the dispute arising in the present appeal whether the incentive received by the assessee under the West Bengal Incentive Scheme was capital or revenue in nature. It was pointed out that similar issue arose before the Calcutta High Court in CIT Vs. Rasoi Ltd. [335 ITR 438 (Cal)] and it has been held that the grant of subsidy in the case was of capital nature. It was further pointed out by the learned A.R. for the assessee that in CIT Vs. Ponni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e from, had been made to the returned income, it per se cannot be the foundation of penalty u/s 271 (1)(c) of the Act as findings in the assessment order cannot be taken a conclusive proof of concealment for the purpose of levy of penalty u/s 271 (1)(c) of the Act. Under the Explanation 1 to section 271 (1)(c), the onus is upon the assessee to establish the bonafides of his claim and where the assessee discharges its onus of proving his claim to be bonafidely made, the Courts have held that there is no merit in levy of penalty u/s 271(1)(c) of the Act. . 12. The Hon'ble Supreme Court of India in CIT, Ahemdabad Vs. Reliance Petroproducts Pvt. Ltd (supra) while referring in the word particulars in inaccurate particulars of income , observed, as per Law Lexicon, the meaning of word particular is a detail or details, the details of a claim, or the separate items of an account. Therefore, the word particulars used in Section 271 (1)(c) would embrace the meaning of the details of the claim made. It was further held as under:- We have already seen the meaning of the word particulars in the earlier part of this judgment. Reading the words in conjunction, they must mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in CIT Vs. Sidhartha Enterprises [(2010) 228 CTR (P H) 579 ] held that the judgment of the Hon'ble Supreme Court in Dharmendra Textile (supra) cannot be read as laying down that every case where particulars of income are inaccurate, penalty must follow. What has been laid down is that qualitative difference between criminal liability under section 276C and penalty under s. 271(1)(c) had to be kept in mind and approach adopted to the trial of a criminal case need not be adopted while considering the levy of penalty. Even so, concept of penalty has not undergone change by virtue of the said judgment. Penalty is imposed only when there is some element of deliberate default and not a mere mistake. This being the position, the finding having been recorded on facts that the furnishing of inaccurate particulars was simply a mistake and not a deliberate attempt to evade tax, the view taken by the Tribunal cannot be held to be perverse. 17. The issue arising in the present appeal is relating to levy of penalty u/s 271 (1) (c) of the Act in respect of addition on account of assessability of sales tax subsidy of ₹ 20,22,09,664/- received by the assessee during the year under c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng debatable issue held that the penalty u/s 271(1)(c) of the Act was not imposable. The relevant findings of the Hon'ble Punjab Haryana High Court in CIT Vs. M/s Gurdaspur Cooperative Sugar Mills (supra) are as under: 3. We find that the reliance on the abovesaid judgment is not tenable, as in the aforesaid case, the deductions under section 80-O of the Act was declined for the reason that the assessee has not produced any details of the expenses allegedly incurred by it. The Delhi High Court observed (page 170): The assessee, for claiming deduction under section 80-O of the Act, wanted the same at 50 per cent of the gross income received in convertible foreign exchange in India provided by it to its foreign clients. The Assessing Officer, however, was of the view that on correct interpretation under section 80-O, deduction is restricted to the net income and, therefore, expenditure incurred in India for earning the foreign exchange had to be deducted. The Assessing Officer, therefore, wanted the assessee to furnish the details of expenses. As the assessee failed to do the needful in respect of various particulars demanded, the Assessing Officer was left with no alter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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