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2016 (3) TMI 921 - ITAT DELHI

2016 (3) TMI 921 - ITAT DELHI - TMI - Penalty levied u/s 271(1)(c) - addition made u/s 35(2) alleging that assessing knowingly and consciously has made an excess claim of deduction u/s 35(2) in spite of the fact that the R & D unit at Chennai was not approve by DSIR - Held that:- Adverting to the facts of this case, we find that the assessee has neither concealed the particulars of income nor has furnished inaccurate particulars of income warranting levy of penalty u/s 271(1)(c) of the Act in re .....

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e has claimed deduction u/s 35(2) of the Act. The ld.AR has relied on numerous decisions in support of his contention. The case of the Revenue is that this is a clear case of furnishing inaccurate particulars of income which the assessee has done with the aim to evade payment of tax. Before we discuss the cases relied on by the parties, we would like to mention that the assessee has made a full and true disclosure of income and has made a claim for deduction. Hence, the assessee has made a bonaf .....

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TA No. 3848/Del /2013 - Dated:- 19-2-2016 - SHRI G.D. AGRAWAL, VICE PRESIDENT, AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER For The Appellant : Ms. Anima Bernwal, Sr. DR For The Respondent : Shri Satyen Sethi, Adv. Shri Tarun Pandey, Adv ORDER PER CHANDRA MOHAN GARG, JUDICIAL MEMBER This appeal filed by the Revenue is directed against the order of the CIT(A)-XII, New Delhi dated 28/03/2013 for A.Y 2006-07 deleting the penalty amounting to ₹ 26,53,420/- levied u/s 271(1)(c) of the Income-ta .....

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₹ 1,30,43,90,275/- on the allegation that the assessee had furnished inaccurate particulars of income. But there was no allegation regarding any concealment of income. Aggrieved, the assessee went in appeal before the ld. CIT(A) on all grounds except the addition on account of excess claim of deduction u/s 35(2) and addition for penalty of ₹ 2000/-. Satisfied with the contentions of the ld. AR, the ld. CIT(A) granted relief to the assessee on all the grounds. 3. After giving appeal e .....

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. The ld. DR relied on the orders of the assessing authority and submitted that the ld. CIT(A) was not justified in giving relief to the assessee. He further submitted that the ld. CIT(A) erred in not appreciating the nature and extent of concealment and that the AO had imposed penalty u/s 271(1)(c) of the Act of the tax sought to be evaded well within the prescribed limits. 4. Before us also, the ld. AR reiterated the submissions made before the ld. CIT(A) and contended that the assessee was el .....

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it was informed to tax department. Assessee offered addition in income during the assessment proceedings based on approval of expenses by DSIR which was accepted by the AO without any modification. In view of the above, the ld. AR submitted that the allegation of the AO is baseless. The ld. AR relied on a catena of decisions including the decision of the Hon ble Delhi High Court in the case of HCIL Vs. Arrpl Triveni [JV] Vs. ACIT [2011] 16 Taxmann 384 [Del], CIT Vs. Vamchampigons and Agro Produc .....

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4 Taxman 571 [SC] and CIT Vs. Bacardi Martini India Ltd [2007] 288 ITR 585/158 Taxman 348 [Delhi] held that mere erroneous claim in the absence of any concealment or furnishing of inaccurate particulars is no ground for levying penalty especially when there is nothing on record to show that the explanation offered by the assessee was not bona fide or any material particulars were concealed or furnished inaccurate. 6. We have heard the rival submissions and have perused the relevant material on r .....

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s and penalty proceedings are two entirely different subjects which operate in distinct and separate spheres so much so that entirely different parameters are applicable for making quantum addition and for levying penalty under section 271(1)(c) of the Act. There can be no dispute with regard to the position of law that under section 271(1)(c) penalty can be levied only if either the act of "concealment of particulars of income" or "furnishing of inaccurate particulars of income&q .....

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ddition in quantum would not lead to automatic levy of penalty and this is also true in respect of furnishing of inaccurate particulars of income. Not only is the levy of penalty discretionary in nature but the discretion has to be exercised keeping the relevant factors in mind and the approach of the taxman must be fair and objective. This subject has been a matter of great controversy. Finally, after referring to the decisions in the case of Dilip N. Shroff vs JCIT & Another, 291 ITR 519, .....

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nished inaccurate particulars of his income. The meaning of the word "particulars" used in section 271(1)(c) would embrace the details of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate parti culars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an .....

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t any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars. 7. Adverting to the facts of this case, we find that the assessee has neither concea .....

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ally lead to levy of penalty as discussed above. It is not a case where the assessee has not disclosed full and final facts rather assessee has claimed deduction u/s 35(2) of the Act. The ld.AR has relied on numerous decisions in support of his contention. The case of the Revenue is that this is a clear case of furnishing inaccurate particulars of income which the assessee has done with the aim to evade payment of tax. Before we discuss the cases relied on by the parties, we would like to mentio .....

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amount to either concealment of income or furnishing of inaccurate particulars of income automatically. The Revenue is bound to establish its case which falls under either of the two conditions laid in section 271(1)(c) of the Act. The Revenue has relied on various decisions 8. The first decision of the Hon'ble Supreme Court relied on by the ld. DR in the case of CIT Vs Reliance Petroproducts, has already been discussed by us which, in our opinion, supports the case of the assessee because i .....

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Revenue s contention that submitting an incorrect claim in law for the expenditure on interest would amount to giving inaccurate particulars of such income. In this case, the facts are simple. The Assessing Officer has summarily rejected the submissions made by the assessee in reply to the penalty notice and proceeded to levy penalty The assessee has neither concealed the income nor has furnished any inaccurate/false particulars for the purpose of claiming the deduction. There was no false stat .....

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