TMI Blog2016 (9) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Had the revised returns been filed (withdrawing claim made u/s 80IB of I.T. Act for asstt. year 2005-06 and 2006-07) well before the time of filing return for asstt. year 2007-08 i.e. well before 31.10.2007, but after questionnaire dated 4.7.2007 was issued by Ld. AO, would the assessee be justified in claiming a favourable consideration ? No. In view of the reasoning earlier given in this order, the assessee would still be hit by Explanation 1(B) to S. 271(1)(c) of I.T. Act and would be still liable to pay penalty u/s 271(1)(c) of I.T. Act. Merely because the assessee delayed the filing of revised return of income (for asstt. year 2005-06 and 2006-07) till 31.10.2007, i.e. till the time of filing of return for asstt. year 2007- 08 even after receiving questionnaire dated 4.7.2007 ; the assesee cannot claim favourable consideration. One’s own mistake or delay can’t be used to advance one’s cause. In law, nobody can claim the benefit of delays or mistakes on his own part; though it may advance the cause of the other side. Penalties levied u/s 271(1)(c) of I.T. Act by the Ld. AO for both asstt. years 2005-06 and 2006-07 ; and upheld by the Ld. CIT(A) for both these years are he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only in the computation and as such there is no case of furnishing of inaccurate particular of income and imposition of penalty. 4. The order of lower authority are not justified on facts and same are bad in law. 2. For the sake of convenience, these two appeals filed by the assessee are disposed off through this consolidated order. These appeals are filed against levy of penalties amounting to ₹ 10,35,008/- for asstt. year 2005-06 and ₹ 15,20,262/- for asstt. year 2006-07 levied u/s 271(1)(c) of I.T. Act. The penalties were imposed by the Ld. AO in respect of claim made by the assessee u/s 80IB of I.T. Act in the original return of income for asstt. years 2005-06 and 2006-07 respectively. The quantum of deduction claimed u/s 80IB of I.T. Act was ₹ 28,28,472/- for asstt. year 2005-06 and ₹ 45,16,523/- for asstt. year 2006-07. In the course of asstt. proceedings for asstt. year 2005-06 the Ld. AO issued questionnaire dated 4.7.2007 wherein, vide point No. 6 of the questionnaire, the assessee was asked by the Ld. AO to give details of exemptions and deductions claimed by it and to clarify as to why the same should be accepted by the department. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explanation 1 4 to section 271(1)(c) of Income tax Act, 1961. Reference can also be made to the case law of CIT vs. Escorts Finance Ltd. (2009) 226 CTR 105 (Del), where the jurisdictional High Court held that in case of false claim penalty for concealment is leviable even though the said claim is declared in the return of income. The above decision was rendered in view of the fact that each year, the Revenue hardly takes up three to five percent of returns under scrutiny u/s 143(2) of the Act after which assessment is framed under sub-section (3) of section 143 of the Act. Therefore, with the hope that its return may not come under scrutiny and may be assessed on the basis of 'self assessment.', as assessee can venture to give wrong information. Therefore, it was held that merely because information was available in the Tax Audit Report, would not absolve it from the penalty. In another case Gujarat High Court in the case of CIT vs. Vidyagauri Natwarlal and Ors. (1999) 238 ITR (Guj) had held that in the case of false claim, penalty for concealment is attracted. 4.2 After considering the Apex Court decision in the case of M/s Reliance Petroproducts, The Hon'ble H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has furnished inaccurate particulars of income on account of ineligible deduction claimed u/s 80IB of I.T. Act and confirmed the levy of penalty u/s 271(1)(c) of I.T. Act by relying on the following decisions : 1. K.P. Madhusudhanan v. CIT (2001) 118 TAXMAN 324 (SC) 2. Ravi Co. v. ACIT (2005) 143 TAXMAN 287 (MAD.) 3. M. Sajjanraj Nahar v. CIT (2006) 155 TAXMAN 536 (MAD.) 4. CIT, Delhi-IV v. Escorts Finance Ltd. *(2009) 183 TAXMAN 453 (DELHI) 5. CIT v. Zoom Communication (P.) Ltd. (2010) 191 TAXMAN 179 (Delhi) 2.1.2. During penalty proceedings for asstt. year 2006-07 the AO issued show cause notice to assessee on 11.1.2012.The assessee filed its reply and submitted that all the details given in the return were correct, there was no concealment of income, nor there were any inaccurate particulars of such income furnished.The assessee company also submitted that it claimed deduction u/s 80IB as it was of opinion that it is available to them, but while preparing return for asstt. year 2007-08, it came to the knowledge of the management that this deduction was not available to the assessee company, and the company immediately revised the return of income for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT v. Zoom Communication (P.) Ltd. (2010) 191 TAXMAN 179 (Delhi) 3. Now the assessee is in appeal before us for both asstt. year 2005-06 and 2006- 07. We have heard both sides carefully. We have also perused the materials on record. The Authorised Representative of the assessee vehemently opposed the orders of the lower authorities for both asstt. years 2005-06 and 2006-07. She relied on Supreme Court decision in the case of Virtual Soft Systems Ltd. vs. CIT(2007) 159 Taxman 155 (SC) for the proposition that section 271 of Income Tax Act has to be construed strictly and narrowly and not widely or with the object of advancing the object and intention of the legislature. She also contended that the view favourable to the assessee should be adopted when two reasonable views are possible. She further relied on the decision of Hon ble Supreme Court in the case of CIT vs. Reliance Petro Products Ltd. 322 ITR 158 (SC) for the proposition that mere making of a claim, which is not sustainable in law, by itself, does not amount to furnishing inaccurate particulars regarding the income of the assessee. She contended that withdrawal of the claim u/s 80IB of I.T. Act was a voluntary and bon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, even on strict and narrow construction of S. 271(1)(c) of I.T. Act and two reasonable views are not possible. Hence the case of Virtual Soft System Ltd. vs. CIT (supra) does not help the assessee. The assessee withdrew deduction u/s 80IB of I.T. Act by filing revised return only when it was faced with query raised by Revenue during assessment proceedings for asstt. year 2005-06, to justify its claim u/s 80IB of I.T. Act. The assessee could have withdrawn the claim before the case was selected for scrutiny by issue of notice u/s 143(2) of I.T. Act, which the assessee failed to do. In fact the assessee did not withdraw the claim even after the case was selected for scrutiny by issue of notice u/s 143(2) of I.T. Act ; and waited till the AO issued the questionnaire specifically requiring the assessee to justify its claim. Under these facts and circumstances it reasonably can also be concluded that the assessee already knew at the time of filing original returns of income for asstt. year 2005-06 and for asstt. year 2006-07 that the deduction u/s 80IB of I.T. Act was not available to it and further that despite this knowledge, the assessee made claim u/s 80IB of I.T. Act, though i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us assessees to make wholly untenable and unsustainable claims without there being any basis for making them, in the hope that their return would not be picked up for scrutiny and they would be assessed on the basis of self-assessment under section 143(1) and even if their case is selected for scrutiny, they can get away merely by paying the tax, which, in any case, was payable by them. The consequence would be that the persons, who make claims of this nature, actuated by a mala fide intention to evade tax otherwise payable by them, would get away without paying the tax legally payable by them, if their cases are not picked up for scrutiny. This would take away the deterrent effect, which these penalty provisions in the Act have. (Para20) 3.2.1. Further, perusal of the binding order of Hon ble Jurisdictional High Court in the case of CIT vs. Zoom Communication Pvt. Ltd. (supra), relevant portion of which has been reproduced in the preceding paragraph 3.2, shows that the Hon ble High Court has taken judicial notice of the fact that only a small percentage of income-tax returns are picked up for scrutiny and has held that provisions for levy of penalty u/s 271(1)(c) of I.T. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T. Act were withdrawn by the assessee much after the Ld. AO issued questionnaire dated 4.7.2007 asking the assessee to clarify why exemptions and deductions claimed by it should be accepted. By that time it is too late and the assessee has missed the boat. At that late a stage, well past the critical stage, the assesee cannot get away by merely paying taxes and the assessee must, in addition, also pay penalty u/s 271(1)(c) of I.T. Act. 3.2.2. The assessee has claimed that revised returns for both asstt. years 2005-06 and 2006-07 were filed, withdrawing claim u/s 80IB of I.T. Act at the time when return for asstt. year 2007-08 was being filed. The assessee claims that the realisation that the assessee was not eligible for deduction u/s 80IB of I.T. Act was arrived at the time of filing return for asstt. year 2007-08 impliedly claiming thereby that the assessee decided to withdraw the claims u/s 80IB of I.T. Act for asstt. year 2005-06 and asstt. year 2006-07 (by filing revised returns of income) not because of the questionnaire dated 4.7.2007 issued by the Ld. AO) but because subsequently at the time of filing return for asstt. year 2007-08 the assessee on its own realised that d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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