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2017 (1) TMI 888 - ITAT MUMBAI

2017 (1) TMI 888 - ITAT MUMBAI - TMI - Penalty under section 271(l)(c) - claim of deduction u/s 80IB disallowed - proof of concealment of income - Held that:- Nothing has been brought before us to show whether any of the expenses were found to be bogus or false. The claim of the assessee made u/s 80-IB was reduced only because of re-allocation of expenses done by the AO. The exercise of reallocation was done by the AO on the basis of his information and understanding disregarding the claim of th .....

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al expert. The AO did not examine the concerned Chartered Accountant during the course of penalty proceedings before rejecting the explanation of the assessee. Nothing was brought on record by the AO to negate the assertion of the assessee that the claim u/s 80-IB was based upon his bona fide belief for making apportionment of expenses in the manner as was done by the assessee. - Even otherwise, the re-allocation exercise done by the AO would also involve some kind of guess work which cannot .....

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concealment or furnishing of inaccurate particulars of income by the assessee. - Decided in favour of assessee - I.T.A. No. 6243/Mum/2011 - Dated:- 11-1-2017 - Shri Joginder Singh (Judicial Member) And Shri Ashwani Taneja (Accountant Member) Appellant by : Shri Suman Kumar Respondent by : None ORDER Per Ashwani Taneja, AM This appeal has been filed by the revenue against the order of the Commissioner of Income-tax (Appeals)-35, Mumbai [hereinafter called CIT(A)] dated 20-06-2011 passed against t .....

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ed upon the order of the AO. 3. The brief background of the case is that the assessee is having manufacturing facility at Daman comprising of 2 units, i.e. Unit I and Unit II. Assessee had shown loss in respect of Unit I whereas claimed deduction u/s 80IB in respect of Unit II. During the assessment proceedings, the AO found that expenses of the units are not proportionate to the production or turnover achieved by each unit. The AO, therefore, re-allocated the total expenses of both the units an .....

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wrong was detected by the AO. Re-working of the deduction has been done by the AO on the basis of his understanding of law and facts without pointing out anything bogus or false therefore, no penalty should be levied. But the AO did not agree with the assessee and levied the penalty of ₹ 19,73,160/- on the disallowance made by the AO by reducing the claim of deduction u/s 80IB. 4. In the appeal before the Ld. CIT(A), the assessee reiterated its submission in detail. It was submitted that b .....

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ing bifurcation of expenses were submitted truly and correctly. The re-working was done by the AO only on the ground that the assessee had shown higher turnover of the eligible unit. It was also submitted that the claim of expenses was based upon the allocation done on the basis of certificate obtained from a professional expert i.e. Shri PM Joshi, Chartered Accountant in form 10CCB. Under these circumstances, it can be said that the claim was based upon genuine and bonafide belief of the assess .....

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at the variation with reference to the admitted income is only in respect of bifurcation of expenses between the two units in respect of administrative expenses and selling expenses and assessment of interest income under the head other sources. Regarding bifurcation of expenses, it is seen that the same was claimed on the basis of certificate issued by C.A. in Form No.10CCB. The A.O. did not dispute the fact that the claim was made in accordance with the certificate issued by C.A. As contended .....

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se the appellant had bonafide belief that the certificate issued by the C.A. was correct. Even if explanation 1 is invoked, there is only a rebuttable presumption of concealment in law and the same can be said to be rebutted by the assessee when the claim is based on the certificate issued by a qualified C.A. and this would constitute bonafide belief and reasonable cause for not imposing penalty. As contented by the representative, Hon'ble Supreme court in the case of CIT vs. Reliance Petro .....

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s sufficient to say that the assessment proceedings and the subsequent penalty proceedings are independent proceedings. The findings and conclusions drawn the authorities in the assessment proceedings are relevant but cannot be construed as conclusive so as to fasten the assessee with the charge of concealment of income and furnishing of inaccurate particulars thereof. A similar situation was before the Hon'ble Punjab & Haryana High Court in the case of Deep Tools (P) Ltd. 'supra). I .....

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aid parity of reasoning is applicable in the present case too. In the case of T.AshokPai vs. CIT2007)210CTR(SC) 259: (2007)292 ITR 11, Hon'ble Supreme Court also observed that the penalty under section 271(1)(c) was not exigible where the claim of the assessee was based on the report of an expert. In the present case too, as observed earlier, the accounts of the assessee are duly audited. The return of income was accompanied by the audit report required under section 80IA and there is nothin .....

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riot press the ground before the Hon'ble Tribunal but the necessary and relevant fact s were submitted before the A.O. and the appellant was under the bonafide belief that the interest is assessable under the head business as the receipt of interest was closely linked with the business of the industrial undertaking and in any case the same was certified by the qualified Chartered Accountant in Form 10CCB. Thus, there is no case for levy of concealment penalty even in respect of interest inc .....

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tion of expenses done by the AO. The exercise of reallocation was done by the AO on the basis of his information and understanding disregarding the claim of the assessee, which was based upon a certificate in form 10CCB issued by a professional expert. Nothing has been brought on record by the AO to show if the certificate was based upon any erroneous premises or wrong facts supplied by the assessee. During the course of penalty proceedings, the assessee furnished detailed explanation in this re .....

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the manner as was done by the assessee. 6. Even otherwise, the re-allocation exercise done by the AO would also involve some kind of guess work which cannot be said to be purely scientific or devoid of any flaws. If the allocation done by the assessee was not precise and correct as per facts of the case, then, it can also not be said that the re-allocation exercise done by the AO was free from any doubts or ifs and buts. Thus, it is a case where the hypothesis of there being a concealment of inc .....

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