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TMI Blog2015 (10) TMI 2551X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income Tax Act,1961 2. Facts of the case in brief, as taken from the appeal for the assessment year 2001-02, are that the assessee is proprietor of M/s. Krishna Engineering Works. Search and seizure operations were conducted on business and residential premises of the assessee on 16.7.2003. It was found during the course of search that the assessee was engaged in manufacture and sale of electronic street light timers to various municipalities and this business income was not disclosed in the return of income. The assessee estimated the net profit out of the undisclosed sales of Rs. 2,59,03,360 for the assessment years 2001-02 to 2004-05 at Rs. 92,59,294. 3. Consequent upon search operations in the returns filed in response to notice un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer also initiated proceedings for imposition of penalty under S.271(1)(c) of the Act, in relation to the claim of the assessee for relief under S.80IB of the Act. In response to the penalty notice, assessee contended that there was no concealment of any particulars of income or furnishing of inaccurate particulars of income and he is under bona fide impression that he is eligible for deduction under S.80IB. 7. The Assessing Officer was not convinced with the explanation of the assessee. He noted that the assessee has to maintain proper books of account and enclose Profit & Loss Account, Balance Sheet, audit Certificate in Form No.10CCB in order to claim deduction under S.80IB. As against this, he noted the assessee has not maintai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ras 7.4 to 7.6 of his impugned order as follows- "7.4 All the foregoing facts and discussion made prove that the appellant initially has not disclosed his business activity and when confronted with the bank accounts and other corroborative evidences in support of his business, he admitted the incomes from such business and knowing fully well that he had not fulfilled any of the conditions for claiming deduction u/s 80IB made the claim only to reduce the tax burden on the undisclosed income. The appellant has nit admitted this obvious position and went on making the claim of deduction u/s 80IB before different fora. It is after protracted litigation and only during the course of set aside assessment proceedings, the appellant conceded the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. I have considered the rival submissions and perused the orders of the authorities and other material on record. Admittedly, impugned penalties under S.271(1)(c) have been imposed only with reference to the claim of the assessee for deduction under S.80IB of the Act, in respect of the profits and gains claimed to have been derived from the manufacture of electronic street light timers. It is during the course of search and seizure action proceedings under S.132 of the Act, the said line of business being carried on by the assessee has come to light. While filing the returns for the years under appeal in response to notices under S.153A of the Act, assessee declared higher incomes than those admitted in the returns filed earlier, offering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the assessee has contested the denial of claim by the Assessing Officer, right upto the stage of Tribunal. 12. Further, mere disallowance of a claim made by the assessee cannot automatically lead to the inference of either concealment of income or furnishing of inaccurate particulars thereof, as held by the apex Court in the case of Reliance Petro Products Ltd. (322 ITR 158), wherein it has been held that mere making of a claim which is not found to be sustainable by itself will not amount to furnishing of inaccurate particulars regarding the income of the assessee and just because the assessee's claim has not been accepted, penalty u/s 271(1)(c) cannot be attracted especially when there is no allegation that any particulars filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer, in my considered opinion is not justified. Having not proposed any penalty in relation to the larger portion of profit of the new line of business, there is no justification for penalty in relation only to the claim made by the assessee for deduction under S.80IB of the Act. Had the assessee not made the claim for deduction under S.80IB, if the approach of the Assessing Officer is approved, there is no case for penalty for concealment, because everything would have remained profit of the new line of business discovered, in relation to which no penalty proceedings were initiated. Considering in the light of the fact that disclosure of profits from such business did not attract any penalty u/s 271(1)(c), making a claim u/s 80IB out of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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