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2016 (7) TMI 1010 - ITAT MUMBAI

2016 (7) TMI 1010 - ITAT MUMBAI - TMI - Penalty u/s 271(1)(c) - Held that:- Where an agreeable, controversial or debatable deduction is claimed, the claim could not be false, otherwise, it would become impossible for any assessee to raise any claim or deduction which might be debatable and it was not the intention of the legislature to make punishment such claims, if they were not accepted. The ld. CIT(A) rightly concluded that there was no furnishing of inaccurate particulars of income. - .....

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ue against the order passed by learned CIT(A) 17, Mumbai dated 29-01-2014 for A.Y 2006-07 on the following grounds:- 1) "On the fact and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the penalty u/s 271(1)(c) of the Act without appreciating that the assessee had failed to rebut the presumption in Explanation - 1 of section 271(1)(c) of the Act. 2) "On the fact and in the circumstances of the case and in law, the Ld. CIT(A) erredin deleting the penalty u/ .....

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e is engaged in manufacturing, trading in agrochemical, growing and selling of seeds. The assessee electronically filed its return of income for the A.Y under consideration declaring total income at ₹ 122,719,795/-. The assessment proceedings in this case was completed on 27-11-2009 u/s. 143(3) of the Act determining the total income of ₹ 67,94,04,470/- as against returned income of ₹ 122,719,795/. In the assessment, the AO has made adjustment u/s. 145A to the value of closing .....

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oncealment of income. In response to which the assessee vide its letter dated 22-03-2012 submitted as under:- (c) Adjustment under section 145A of the Act to the value of closing stock: With regards to adjustment made by AO under section 145A of the Act to the value of closing stock, MIL has to state as under:- During the year under consideration, MIL has followed an exclusive method as far as the provisions of section 145A of the Act are concerned. As per Annexure B to the tax audit report it c .....

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rch. 2006 is nothing but excise duty paid on input to be utilized on manufacture of excisable product. The said credit not related to the closing stock of finished goods. Accordingly, the same should not be added in closing stock in compliance with the provisions of section 145A of the Act. Further, MIL has placed reliance on the following judicial precedents to support its contention: ………… All the relevant particulars in respect of valuation of closing sock were alre .....

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he Act. …….. We therefore request you to drop the penalty proceedings which have been initiated under section 271(1( c) of the Act. 3.1 During the course of penalty proceedings u/s. 271(1) ( c) before the AO the assessee has relied on various case laws in support of its submissions. Finally, relying on the decision of the Hon ble SC in the case of Union of India Vs. Dharmendra Textiles & Ors (306 ITR 277), wherein it has been held that the assessee concealed its income and subm .....

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rned CIT(A) now the revenue preferred appeal before the Tribunal. 6. At the very outset, the ld. Ld. Departmental Representative appearing on behalf of the revenue submitted before us that the learned CIT(A) has erred in deleting the impugned penalty. He also submitted that the assessee has failed to rebut the presumption given in Explanation 1 of s. 271(1) (c) of the Act. He relied on the orders of the Assessing Officer in levying the impugned penalty being furnishing of concealment/inaccurate .....

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the learned CIT(A) has passed a reasoned order thoroughly considering the provisions of section 145. Now, it is relevant to reproduce herein below the Explanation 1 to section 271. Explanation 1 to section 271(1) ( c): Where in respect of any facts material to the computation of the total income of any person under this Act- (A) such person fails to offer an explanation or offers an explanation which is found by the assessing Officer or the Commissioner (Appeals) or the Commissioner to be false .....

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aled. 8.1 Ld. CIT(A) after thoroughly considering the facts as well as legal position has rightly held that where an agreeable, controversial or debatable deduction is claimed, the claim could not be false, otherwise, it would become impossible for any assessee to raise any claim or deduction which might be debatable and it was not the intention of the legislature to make punishment such claims, if they were not accepted. The ld. CIT(A) rightly concluded that there was no furnishing of inaccurat .....

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