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2016 (4) TMI 212 - ITAT DELHI

2016 (4) TMI 212 - ITAT DELHI - TMI - Penalty levied under section 271(1)(c) - sales tax exemption/ subsidy undisclosed - Held that:- Assessee has made sufficient disclosure of the fact of claim of sales tax exemption/ subsidy before the Assessing Officer. In the same set of facts, the assessee is interpreting, benefit of sales tax as subsidy or incentive of capital nature, whereas the Revenue and the appellate authorities including Tribunal has held the benefit of sales tax as revenue in nature .....

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l not be liable for penalty under section 271(1)(c) of the Act , but in the facts of the case the claim is on the basis of certain notifications and the assessee has furnished explanations which cannot be said to malafide . In the case of CIT versus HCIL Kalindee Arsspl (2013 (8) TMI 245 - DELHI HIGH COURT ) also the Hon’ble court has held that merely because the assessee complied with the statutory procedural requirement of filing the prescribed form and certificate of the chartered accountant, .....

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sallowances on account of provision for gratuity - Held that:- As regards the addition on account of provision for gratuity it is an admitted position that this sum was not added back in the original computation of income. It is also apparent that the aforesaid mistake was detected only in the revision proceedings u/s 263 of the Act; when assessee was directed to reconcile the difference of ₹ 1.81 crores under the head provision for “gratuity” between outstanding as per balance sheet and a .....

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nnot regard the mistake to be an inadvertent mistake or simple case of oversight. We therefore find justification in the imposition of penalty u/s 271(1)(c) of the Act - Decided against assessee.

Levy of penalty u/s 271(1)(c) - additional deprecation claimed by the appellant u/s 32(1)(iia) in respect of computer software ‘Primevera’ - Held that:- On consideration of the facts we hold adequate and necessary disclosure in accordance with law were made by the appellant company in respect .....

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rrect claim would not tantamount to furnishing of inaccurate particulars unless it was established that the assessee had acted with a mala fide intention or had claimed deductions being aware of the well settled legal position - Decided in favour of assessee. - ITA Nos. 3052/Del/2014 - Dated:- 31-3-2016 - Sh. C. M. Garg, Judicial Member And Sh. O. P. Kant, Accountant Member For the Appellant : Sh. Ajay Vohra, Sr. Advocate, Sh. Rohit Jain & Sh. Deepesh, Advocates For the Respondent : Sh. Asho .....

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in upholding the action of the Assessing Officer in levying penalty of ₹ 28,24,94,177/- u/s 271(1)I(c) of the Income Tax Act 1961 ( the Act ), which is illegal and bad in and law. 1.1 That on the facts and in the circumstances of the case and in law, the CIT(A) erred in upholding the aforesaid action of the Assessing Officer, without appreciating that the penalty order was passed in undue haste resulting in avoidable multiplicity of proceedings, which is unwarranted in law 1.2 That on the .....

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orded in assessment order, without any independent application of mind. Without prejudice 2 That the CIT(A) erred on facts and in law in upholding the action of the Assessing Officer in levying penalty under section 271(1)(c) of the Act in respect of the addition of ₹ 81.59 crores made on account of sales tax incentive/subsidy holding the same to be merely notional and/or revenue in nature, as against the same being claimed as capital receipt by the appellant 2.1 That the CIT(A) erred on f .....

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de only on account of difference of opinion between he appellant and the Assessing Officer. 2.3 That the CIT(A) erred on facts and in law in upholding the penalty imposed by alleging that: (a) the appellant give inadequate explanations; (b) the action of the appellant in changing the method of accounting in respect of subsidy was not bona fide. 2.4 That the CIT(A) erred on facts and in law in upholding the penalty imposed solely on the basis of observations of the Assessing Officer in penalty or .....

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n account of provision for gratuity, which was inadvertently not added back in the computation of taxable income for the relevant assessment year. 3.1 That the CIT(A) erred on facts and in law in upholding the penalty imposed, without appreciating that the above addition was made on account of a bonafide/clerical mistake, which was suo motu accepted by appellant in quantum as well as penalty proceedings, and no appeal in respect of such disallowance was filed by appellant. 3.2 That the CIT(A) er .....

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facts and in law in upholding the penalty imposed by the Assessing Officer, without appreciating that the aforesaid addition was itself legally unsustainable in as much as the aforesaid amount was already added back in the computation of income and therefore, there was no warrant to levy any penalty in respect of the same under section 271(1)(c) of the Act. 4.2 That on the facts and in the circumstances of the case, the CIT(A) erred in law in upholding the aforesaid action of the Assessing Offi .....

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(1)(iia) of the Act, in respect of computer software Primeavera . 5.1 That the CIT(A) erred on facts and in law upholding the aforesaid penalty, without appreciating that the disallowance of additional depreciation in respect of computer software Primavera was itself, in the first place, erroneous and therefore, there was no warrant to levy any penalty in respect of the said disallowance under section 271 (1)(c) of the Act. 5.2 That the CIT(A) erred on facts and in law in upholding the aforesaid .....

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law in upholding the aforesaid action of the Assessing Officer without appreciating that the above claim of depreciation was made by appellant on the basis of a professional advise and, therefore, there was no warrant to levy any penalty under section 271(1)(c) of the Act. 2. The relevant facts are that in an order of assessment dated 19.9.2013 u/s 143(3) read with section 263 of the Act, the income of the appellant company was determined at ₹ 909,65,19,961/- by making following additions .....

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ct were initiated on account of concealment of income as well as for furnishing of inaccurate particulars of income by the assessee company. A detailed show cause notice dated 19.9.2013 was issued and served on the assessee company. The assessee vide reply dated 24.10.2013 prayed for keeping the proceedings in abeyance, by making a reference to provisions u/s 275(1A) of the Act. The AO however intimated that it would not be possible to keep the penalty proceedings in abeyance till the disposal o .....

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the AO levied penalty of ₹ 28,21,94,177/- u/s 271(1)(c) of the Act in respect of additions made in the order of assessment, which was confirmed in an order dated 13.3.2014 by ld. CIT(A), Rohtak. Hence, this appeal before us. 4. At the time of hearing, the Ld AR of the assessee referring to the application of the assessee for admission of additional evidence containing a certificate dated 6th May 2015 issued by the Tax Auditor of the assessee, certifying that provision of gratuity amounting .....

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AR also relied on the judgement of the Hon ble Delhi Court in the case of CIT Vs Text Hundreds India Pvt Ltd 239 ITR 263 . The ld. counsel of the Revenue on the other hand opposed admission of the certificate as additional evidence. We have heard the rival submission of the parties on the issue and perused the material on record. We are of the opinion that certificate is directly related to the issue of gratuity amount of ₹ 88.00 lakhs, which is included in amount of gratuity of ₹ 1, .....

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sed without affording reasonable opportunity of being heard to the assessee and without any independent application of mind. 5.1 Before us the learned AR for the assessee submitted that the assessee vide letters dated 4.10.2013, 24.10.2013 and 8.11.2013 had requested the Assessing Officer to keep the penalty proceedings in abeyance till disposal of assessee s appeal against section 263 proceedings by the Tribunal. It was submitted that in the said letters, it was also informed to the Assessing O .....

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uantum proceedings was unjustified and erroneous in terms of proviso to clause (a) to sub section (1) of section 275 of the Act. Reliance was placed on the judgments in the cases of CIT v Surendra Gulabchand Modi 140 ITR 517 (Guj) and CIT v Wander (P) Ltd. 358 ITR 408 (Bom). It was submitted that since the penalty order was passed by the Assessing Officer on the basis of findings given in the fresh assessment order, which in turn is based on the order passed under section 263 of the Act, without .....

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tion of the Assessing Officer and CIT(A) on the ground that there was nothing in law which prevented the Assessing Officer from passing the order u/s 271(1)(c) of the Act till the disposal of appeal by the CIT(A). It was further submitted that there was no merit in the submission of the appellant that the order imposing penalty has been framed without application of mind by the Assessing Officer. 5.3 Having considered the rival submissions, we are in agreement with the conclusion of the authorit .....

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ents on merits of the levy of penalty, those have been considered independently while disposing the remaining grounds in this appeal. With these observations, we dismiss grounds 1 to 1.3 of the appeal. 6. The Grounds No. 2 to 2.5 challenge the conclusion of the CIT(A) in upholding the action of the Assessing Officer in levying penalty u/s 271(1)(c) of the Act in respect of the addition of ₹ 81.59 crores made on account of sales tax incentive/subsidy holding the same to be merely notional a .....

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produced below :- 2.1 It was noticed that ₹ 81.59 Cr. was shown as 'Sales Tax Subsidy' - 'Capital Reserve' under the head 'Reserves and Surplus' in Schedule-2 of the Balance-Sheet as on 31.03.2008. It was also noticed that this was the first year of such practice (of taking 'Sales Tax Subsidy' to the reserve). 2.2 The close scrutiny revealed that this money was not received from the State Govt. In fact, one industrial unit of the assessee company has been .g .....

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s seen that this Sales Tax exemption has been available to assessee in earlier years also, but there was.-no practice to take a part of sales (treating it, in the year end, as 'Sales tax Subsidy') to the Balance Sheet. Instead, a deduction of equivalent was being claimed as deduction at the time of computation of income (which was being disallowed by the revenue). 2.3.2 Although, there was clear deviation from the practice being followed earlier and the case was under scrutiny, however, .....

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(3) r.w.s. 263; the issue has been considered in detail and as discussed in the assessment order dated 17.09.2013, the amount under consideration (Rs. 81.53 Cr.) was found to be taxable. 2.5.1 It is seen during the (re) assessment proceedings (u/s 143 r.w.s. 263) that in earlier years, in order to avoid payment of due taxes, assessee stretched its imagination and came out with innovative device in form of assuming (non-existent) 'subsidy' & claiming a deduction at the stage of comput .....

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tax payment is served without making a claim at the stage of computation of Income. 2.5.2 It was only due to departmental proceedings (u/s 263 and subsequent proceedings u/s 143(3) r.w.s. 263) that all the facts relating to the said income and material to the computation of total income of the assessee were brought on record/noted/discovered. {For instance, the facts that (I) this money was not received from the State Govt., It is actually part of the price (sales proceed) received In lieu of t .....

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/ un-acceptable/ un-substantiated and hence, were rejected. 2.7.1 In view of the above, it is clear that the assessee not only furnished inaccurate particulars of the income to the above extent of 81,58,94,102/- but also concealed particulars of income to the said extent 2.7.2 The assesses has failed to substantiate the explanations offered by it. The assessee also, failed to discharge the onus, cast upon It by the law, to prove that the explanations were bona-fide. Also, assessee did not discha .....

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ee but the department had to discover them by way of proceedings u/s 263 and 143(3) r.w.s. 263. 2.7.3 Therefore, assessee is liable for penalty under the (general) provisions of section 271(1)(c) of the Income Tax Act, 1961 as well as by it, mischief of (deeming) provisions under Explanation 1 to the said section? 6.2 The assessee during the penalty proceedings contended in reply that change of accounting treatment was disclosed (during the original assessment proceedings), vide letter dated 8.2 .....

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pected to examine each and every aspect in scrutiny, specially, in the cases like that of present assessee who had turnover of about ₹ 50 thousand crores. He held that such assessee have full-fledged taxation department and luxury of services of well qualified professionals and therefore, it was expected of the assessee to file accurate particulars of income and expressly disclose each and every issue which has even smallest possibility of dispute in/alongwith the return of income. Apart f .....

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ding taxability of so called sales tax subsidy as revenue receipt and there has been no change in the nature of receipt in the year under consideration as compared to the earlier years where the deduction on account of said hypothetical sales tax subsidy was being claimed by the assessee in the computation of income. It was thus concluded that reasons behind the mentioning of above receipt in the schedule attached to the balance sheet are self speaking and had the conduct of the assessee been ho .....

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a) The preposition that the sales proceeds contain (hypothetical) sales tax Subsidy is a stretch of imagination apparently to evade tax. b) The assessee changed its method of accounting for sales - tax Subsidy , in the year under consideration apparently with the malifide intention of escaping the issue from the notice of the revenue. c) There was a calculated attempt though unsuccessful, to evade the payment of tax on the amount which was part of sales proceeds but termed as sales tax subsidy a .....

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proceedings u/s 263 were initiated. He has thus held that assessee made futile attempts but failed to pinpoint any cogent material which could indicate that the sales tax exemption was granted by the state government as alternative method of providing money and case of the appellant was clearly covered by provisions of (A) and (B) part of above said Explanation 1 to the section 271(1)(c) of the Act. 6.4 The CIT(A) has upheld the penalty by holding as under: This issue has been discussed at leng .....

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7.4 of his order has pointed out that this explanation was not a disclosure on treatment of Sales Tax Subsidy adopted in the year under consideration but was an explanation of the deduction claimed in the computation of income in respect of Entry Tax Subsidy and Electricity Duty Subsidy. To say, therefore, that the assessee had made a material disclosure is not a correct presentation of facts. It is a fact, that this issue came up only after an examination of record by the Ld. CIT, Hisar in the .....

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taxable profit through passing of a general entry having an overall effect of taking ₹ 81.59 Crores out of the tax net. Therefore, in the entire proceedings, the appellant has been trying to cloud the issue by taking recourse to inadequate explanation. Mens rea has been proved in this case without doubt. Hence, this ground of appeal is dismissed. 6.5 Before us, the learned Authorized Representative submitted as under: a) Addition made by the Assessing Officer in the assessment order on acc .....

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int no. 13(e) in Form No. 3CD for the year under consideration; d) Elaborate reply/submissions were filed by the appellant during the quantum proceeding, not only setting out complete facts with regard to the claim made and the accounting treatment followed in respect of the sales tax incentive/subsidy, the non taxability of the same was duly supported by elaborate reasoning/justification; e) The claim of the appellant is duly supported by various judicial precedents wherein the various courts a .....

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r Cooperative Sugar Mills (supra) 6.6 Before us, the learned counsel for the assessee further submitted that appeal filed by the assessee against the ITAT order for AY 2004-05 stands admitted before the Hon ble High Court of Punjab and Haryana on 28.7.2014 evidencing that the said issue involves determination of a substantial question of law. Likewise appeal filed by assessee for assessment years 2002-03 and 2005-06 stands admitted vide order dated 16.12.2014. It was thus contended that issue of .....

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d Finance Co. Ltd. 334 ITR 367. It was further submitted that even otherwise since the issue is highly debatable legal issue therefore no penalty is leviable in view of the judgment of Apex Court in the case of CIT v Reliance Petrporducts (P) Ltd. Ltd. 322 ITR 158. It was also contended that the aforesaid claim made by the appellant was very much within the knowledge of the Assessing Officer, since the same was specifically disclosed and discussed by assessee before the Assessing Officer during .....

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ing for Government Grants" issued by the ICAI read along with the opinions on the subject of the Expert Advisory Committee and reported in the compendium of opinions. b) The aforesaid accounting treatment was duly explained vide note No.5 of Notes to Account in Schedule- 20, forming part of audited financial statements, as under: "5 One of the Company's expansion units is eligible or sales tax exemption owing to the investment in capital assets under the State Industrial Policy whi .....

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specific reference of the accounting treatment for sales tax incentive was also made by the statutory auditor vide point No. (d) of the Audit Report: (d) In our opinion and read with note 5 of Schedule 20 regarding accounting, for tax included in sales price of product sold out of sales tax exempted unit tinder Sales Tax Subsidy Reserve account, the Balance Sheet, Profit & Loss Account and Cash Flow Statement, dealt with by this report, comply with the Accounting .Standard referred to in su .....

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Sak Industries Ltd. v DCIT 363 ITR 378 to contend that disclosure made in the schedule/notes to accounts forming part of the audited financial statements, amounted to full and true disclosure, in the context of applicability of proviso to section 147 of the Act. It was submitted that no penalty is imposable in respect of an incorrect claim of deduction, provided all facts in respect of such claim were disclosed before the Assessing Officer. Reliance in support was drawn from the judgement in the .....

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id claim was, for the first time, made in the assessment years 2002-03 to 2004-05. In fact, in the said assessment years, exemption of sales tax incentive was claimed as capital receipt by way of additional ground of appeal before the CIT(A), since the time limit for filing revised return had expired. The application so filed by the appellant for admission of additional grounds was forwarded to the Assessing Officer for comments and separate remand reports were received for the said assessment y .....

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on of the Special Bench of the Tribunal in the case of DCIT v. Reliance Industries Limited: 88 ITD 273. The Assessing Officer, however, did not accept the claim of the appellant on the ground that the decision of the Special Bench of the Tribunal is not applicable, since the same was rendered in the context of different scheme. c) Revised return of income under section 139(5) of the Act was filed by the appellant for the assessment years 2005-06 and 2006-07 for specifically making the aforesaid .....

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are perusal of the computation of income for the said assessment year, the claim made by the appellant is patently noticeable. In fact, in the assessment order for the assessment year 2007-08, the Assessing Officer, following his order in the earlier year, did not agree with the claim of the appellant and held sales tax incentive to be in the nature of revenue receipt. 6.8 The assessee thus prayed that penalty u/s 271(1)(c) of the Act was not leviable for the following reasons: (a) Addition made .....

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subsidy was specifically mentioned by the Tax Auditor in point No.13(e) in Form No.3CD for the year under consideration; (d) Elaborate reply/ submissions were filed by the appellant during quantum proceeding, not only setting out complete facts with regard to the claim made and the accounting treatment followed in respect of the sales tax incentive/subsidy, the non-taxability of the same was duly supported by elaborate reasoning/ justification; (e) The claim of the appellant is duly supported by .....

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the decision of jurisdictional High Court in the case of Gurdaspur Co-operative Sugar Mills (supra). 6.9 It was thus submitted that penalty levied on addition of incentive on account of sales tax exemption is erroneous and calls for being deleted. 6.10 The learned counsel of the Revenue relied upon the order imposing penalty and order of CIT(A) upholding the penalty to contend that levied was in accordance with law. He further submitted that since 01-06-2006, the provision of section 139 has un .....

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as not sufficient for true and full disclosure. He also submitted that the assessee on one hand treated the sales tax exemption as incentive given to the assessee for capital investment of more than ₹ 1,000 crores but the assessee did not reduce the said exemption out of the written down value (WDV) of the assets and thus claimed excess depreciation and on the other hand also claimed the entire sales-tax exemption amount as capital subsidy not taxable, and thus the assessee availed double .....

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the rival submissions and perused the material on record. In the instant case a sum of ₹ 81.59 crores was shown as Sales Tax Subsidy Capital Reserve under the head reserves and surplus in schedule-2 of the balance sheet as on 31.3.2008. The non inclusion of amount of subsidy was also mentioned by the Tax Auditor in point No. 13(e) in Form no. 3CD for the year under consideration. Thus, it cannot be said that there was an absence of disclosure in respect of the amount of subsidy on the par .....

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ital subsidy not taxable in the hands of the assessee, for past many years. It is also observed that there is no change in method of accounting followed by the assessee except change in treatment of the said amount of the subsidy, which too has been claimed as in compliance of accounting standards . It is well settled law that merely accounting entries on a particular item cannot determine the nature of the income as per provisions of income tax act. Further the appeals filed by the assessee aga .....

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of such issue. The Ld. counsel of the Revenue, however relied on the finding of the Delhi High Court in the case of Roger Enterprises P Ltd V/s CIT, Delhi in ITA No. 439/2003 delivered on 4th February, 2016 and submitted that in para 38 of the judgement it is held that mere pendency of the quantum appeal could not have led the ITAT to conclude that the issue was debatable.. However, the Ld. AR of the assessee submitted that the question of law before the Hon ble High Court , in the case of Roge .....

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sue that in the case of Roger Enterprises P Ltd V/s CIT, Delhi (supra) ,Hon ble High Court has not decided the question of law that admission of an appeal on particular issue does not make the issue debatable, and hence the ratio laid down in the judgement in the case of CIT versus Basti sugar Mills company limited (supra) and CIT versus HB leasing and finance Co Ltd (supra) is still valid. In the case of Basti Sugar Mills Co Ltd (supra), Hon ble Court decided a question of law that pendency of .....

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ing that deleting the addition made by the Assessing Officer of an amount of ₹ 18,02,026/- being interest payable on late deposit of provident fund under ITA 232/2005 Page 2 of 2 Section 43-B of the Income Tax Act as the same was not paid during the year? Insofar as question (a) above is concerned, we find that the issue regarding allowability of interest payable on late deposit of provident fund is a debatable issue. This conclusion of ours is fortified by the fact that the very issue is .....

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therefore, could not be disallowed while considering the intimation under Section 143(1)(a) of the said Act. 6.13 In the case of CIT versus HB leasing and finance Co Ltd (supra), while deciding the issue of levy of penalty, the Hon ble Delhi High Court held as under: 3. In so far as the claim of deduction under s. 80M of the Act is concerned, the Tribunal has opined that it was a debatable issue. No doubt, as per the judgment of the Supreme Court in Punjab Distilling Industries Ltd. (supra), the .....

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at not only in the quantum proceedings the CIT(A) had deleted the additions, even when the Tribunal reversed the order of the CIT(A) and this Court also dismissed the appeal of the assessee, the Supreme Court has remitted the case back to this Court and the issue stands admitted. Once the appeal, i.e., IT Appeal No. 612 of 2004 preferred by the assessee has been admitted that would show that substantial question of law on the interpretation is involved. The issue is thus clearly debatable. ( emp .....

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fore the Assessing Officer. In the same set of facts, the assessee is interpreting, benefit of sales tax as subsidy or incentive of capital nature, whereas the Revenue and the appellate authorities including Tribunal has held the benefit of sales tax as revenue in nature. But, we don t find that the assessee has concealed or furnished inaccurate particulars of income on the issue of claim of sales-tax exemption/subsidy. In the case of CIT versus Zoom communication (p) Ltd (supra) it is held that .....

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ndee Arsspl (supra) also the Hon ble court has held that merely because the assessee complied with the statutory procedural requirement of filing the prescribed form and certificate of the chartered accountant, cannot absolve the assessee of its liability if the actor attempt in claiming the deduction was not bonafide. The facts of the case in hand are different from the facts of the case of CIT versus HCIL Kalindee Arsspl( supra). In the circumstances, we are of considered opinion, that no pena .....

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77; 1,37,41,850/- on account of provision for gratuity. The basis of the disallowance was that the Assessing Officer on perusal of the annual report and tax audit report noted that out of liability (of gratuity) debited to profit and loss account for the year under consideration (F.Y. 2007-08) ₹ 2.95 crore is outstanding as on 31.3.2008, whereas only ₹ 1.55 crore has been disallowed. Hence the balance is liable for disallowance and therefore he made disallowance of ₹ 1,37,41,85 .....

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at sum mentioned in the balance sheet does not automatically bring the same to surface; and that s why the issue escaped attention of the AO at the time of (original) assessment proceedings and claim that amount of ₹ 0.88 crores was inadvertently credited to general reserve has not been added back in computation of income and the mistake was bonafide was rejected. The AO therefore imposed penalty by observing as under. 15.6 Under the Tax-audit report, there is specific requirement of repor .....

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iliation but also the reporting of the same (to the revenue). On the contrary, it was noticed that in -spite of specifically asking for, the assessee not only changed versions but also, refrained from supplying the copy of ledger account of the liability. During the proceedings u/s 263 vide order sheet entries dated 17.01.2013 and 08.03.2013,the CIT, Hisar requested the assessee to furnish copy of the ledger account regarding gratuity but the assessee did not furnish the same. Also, the assessee .....

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also attracted because the assessee not only offered false explanation but also offered explanation which the assessee could not substantiate. The assessee failed to discharge the onus that explanation was bonafide. The assessee also failed to discharge the onus that all the facts relating to the same and material to the computation of its total income has been disclosed. 7.2 Before the CIT(A), the assessee submitted that during the relevant assessment year pursuant to mandatory actuarial valuat .....

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ed financial statements. The aforesaid amount of reversal was stated to be inadvertently on account of clerical mistake, omitted to be added back in the computation of taxable income for the relevant assessment year. The appellant during the course of assessment proceedings, vide submission dated 7.5.2013 and during penalty proceedings, vide submission dated 15.11.2013 has suo motu before the Assessing Officer offered the amount in respect thereof for taxation. As regards ₹ 49.42 lacs, it .....

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ncorrect basis. 7.3 The CIT(A) has upheld the levy of penalty in respect of ₹ 88,00,001/- on the following reasons: A perusal of the facts of the case reveals that (as discussed in paras 15.1 to 15.6 of the impugned penalty order) that this so called bonafide mistake was not admitted before the Ld. CIT, Hisar in the proceeding u/s 263 nor before the AO. Hence, this explanation putforth later is an after though and clearly shows that his is a case squarely covered under the expression furni .....

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the AO who has proved why it was not a simple case of oversight in not considering the addition made by the appellant of ₹ 49.2 lacs as provisions for gratuity in its computation of income. The issue has been discussed in detail in the assessment order and relates to liabilities in previous year. The appellant was not able to prove the discrepancies in the figures shown in the balance sheet viz-a-viz the TAR. The appellant did not produce the copy of the ledger account of this liability e .....

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particulars of income on the following reasons: a) The details in respect of provision for gratuity were duly disclosed in audited financial statements for relevant assessment year vide schedule 12 in respect of provisions and schedule 17 in respect of personnel expenses; b) The fact that provision for gratuity amounting to ₹ 88 lacs was transferred to general reserve was disclosed vide clause (B) of schedule 2 of audited financial statements; c) Detailed note on accounting treatment acco .....

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order under section 143(3)/ 263 of the Act. During the penalty proceedings, the appellant had suo motu offered the amount of reversal of provision for gratuity to income-tax vide letter dated 15.11.2013; and g) The Assessing Officer, made addition in respect of reversal of provision for gratuity only on the basis of bona fide disclosures made by the appellant in various documents submitted including the report of the Tax Auditor certifying the amount. Therefore, it cannot be alleged that the ap .....

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ty is not leviable in case of bonafide commission in not accounting for certain stocks. 7.7 The learned counsel of the Revenue and the CIT DR relied upon the order imposing penalty and order of CIT(A) upholding the penalty to contend that same was levied in accordance with law. He further submitted that the Tax Auditor acted in collusion with the assessee and a certificate in the form of additional evidence was a merely self serving evidence and yet the assessee could not be absolved of his resp .....

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ed on the said sum stands deleted. So far as the addition of ₹ 88,00,001/- is concerned that it is an admitted position that this sum was not added back in the original computation of income. It is also apparent that the aforesaid mistake was detected only in the revision proceedings u/s 263 of the Act; when assessee was directed to reconcile the difference of ₹ 1.81 crores under the head provision for gratuity between outstanding as per balance sheet and audit report. It is also mat .....

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be an inadvertent mistake or simple case of oversight. We therefore find justification in the imposition of penalty u/s 271(1)(c) of the Act. As a result the grounds No. 3 to 3.2 of the appeal are dismissed and grounds No. 4 to 4.2 of the appeal are allowed. 8. The Grounds 5 to 5.3 of the appeal relate to levy of penalty of ₹ 5,91,106/- u/s 271(1)(c) of the Act on account of additional deprecation claimed by the appellant u/s 32(1)(iia) of the Act in respect of computer software Primevera .....

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stantiated because the assessee could not substantiate the argument that the said software was under category of plant and machinery which is used for manufacturing on the shop floor. He therefore imposed penalty u/s 271(1)(c) of the Act. On appeal the appellant pleaded that no penalty is leviable for the following reasons: a) The amount spent for purchase of computer software Primavera was added in the amount of fixed assets disclosed vide schedule 5 of audited financial statements for relevant .....

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equired to be filled in the return of income for claimed additional depreciation; and d) The Assessing Officer, made disallowance in respect of aforesaid only on the basis of bona fide disclosure made by the appellant in various documents submitted. Therefore, it cannot be alleged that the appellant concealed/ furnished inaccurate particulars in respect of aforesaid disallowance. The aforesaid list of disclosures duly established that there was no concealment of income or furnishing of inaccurat .....

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be visited with penalty under section 271(1)(c) of the Act. 8.2 The CIT(A) has however imposed the penalty on additional deprecation of ₹ 5,91,106/- under the provision of section 32(1)(ii)(a) of the Act n respect of computer software Primavera by holding as under: The issue of additional depreciation involves a claim in respect of a computer software which the appellant claimed was part of plant & machinery and thereby a part of the production process. The AO has clearly brought on re .....

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to discharge its onus in proving that its action which led to the levy of penalty were bonafide. At the stage of proceedings u/s 263 and also before the AO, they have tried to skirt the issue that this is squarely a case of furnishing of inaccurate particulars/ concealment of income as amply demonstrated in the issue of Sales Tax Subsidy, provision of gratuity as well as that of Computer Software. Even before me, no material fact has been placed which would indicate that all their actions were n .....

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of new machinery or plant, acquired and installed after 31.03.2005 by an assessee engaged in the business of manufacture or production of any article or thing. It was therefore submitted that complete disclosures were made by the appellant in the return of income and the accompanying documents and therefore, no penalty was leviable for the following reasons: a) The amount spent for purchase of computer software primavera' was added in the amount of fixed assets disclosed vide schedule 5 of .....

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ic details are required to be filled in the return of income for claiming additional depreciation; and d) The Assessing Officer, made disallowance in respect of aforesaid only on the basis of bona fide disclosures made by the appellant in various documents submitted. Therefore, it cannot be alleged that the appellant concealed/ furnished inaccurate particulars in respect of aforesaid disallowance. 8.4 The learned counsel of the Revenue relied upon the order imposing penalty and order of CIT(A) u .....

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