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DCIT, Circle 12 (1) , New Delhi Versus M/s GSC Toughened Glass P. Ltd.

2017 (9) TMI 724 - ITAT DELHI

Penalty u/s 271(1)(c) - deduction u/s 80IB was claimed on the basis of an audit report signed by a Chartered Accountant - Held that:- Additions were made by the ld. AO, it is evident that on all grounds on which penalty was levied, there is no dispute that the assessee had not suppressed any facts and the claim has been made on the basis of audited accounts and on the basis of audit report, duly signed by the CA. Hence penalty on the ground of concealment of particulars of income could not have .....

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d the term “installed capacity” to mean “total installed capacity” of all units taken together whereas the AO has taken the 'installed capacity' to mean installed capacity of the eligible units only. The impact of this action of the AO is that the appellant will be entitled for higher WDV on this amount and shall be able to claim higher amount of depreciation allowance in the subsequent years. Thus, in view of the above, it is evident that in view of debatable nature of the issue, it cannot be h .....

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under Section 80IB by exclusion of interest income from the computation of eligible profit - Held that:- On careful consideration, as the interest income from deposits made with suppliers and interest from the customers on delayed payment, is derived from the business of the appellant, it cannot be said with certainty that the same had to be taxed under 'Income from Other Sources'. Accordingly, no penalty can be levied on the same. However, since assessee had admitted to treat interest from ban .....

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he nature of “staff welfare” than 'donation'. Regarding the balance amount of of ₹ 6,000, paid to Helpage (India), no receipt was furnished before me. Further, no receipt in respect of other donations of ₹ 2,5OO was filed. In view of the same, the inaccuracy in filing particulars of income was established to the extent of ₹ 8,5OO on this ground. Levy of penalty was rightly confirmed to the extent of inaccurate particulars of income filed by the assessee in respect of income amo .....

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ER PER H.S. SIDHU, JM The Revenue has filed the present appeal against the impugned order dated 06/9/2013 passed by the Ld. Commissioner of Income Tax (Appeals)-XV, New Delhi on the following grounds:- 1. Whether Ld. CIT(A) was correct on facts and circumstances of the case and in law in restricting the penalty of ₹ 16,59,587/- to ₹ 39,324/- levied by AO on account of furnishing inaccurate particulars of income? 2. The appellant craves leave, to add, alter or amend any ground of appe .....

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of the deduction under section 80IB to ₹ 64,54,637/- by excluding the interest earned on bank deposits and by apportioning loss of ₹ 12,56,947/- from the showroom towards units eligible under section 80IB. iii) Disallowance of ₹ 26,422/- on account of donations. Following this, a notice u/s. 274 read with section 271(1)(c) was issued. The assessee s reply was that the deduction under section 80IB was claimed on the basis of an audit report signed by a Chartered Accountant and .....

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a vs. Dharmendra Textiles Processors (SC) 306 ITR 227 and of the Hon ble Delhi High Court in the case of CIT vs. Zoom Communication Pvt. Ltd., amounting to ₹ 16,59,587/- u/s. 271(1)© of the I.T. Act, 1961 vide order dated 21.3.2012. 3. Aggrieved by the penalty order dated 21.3.2012, assessee filed appeal before the Ld. First Appellate Authority who has partly allowed the appeal of the assessee vide order dated 06.9.2013. 4. Ld. DR relied upon the order of the AO and reiterated the con .....

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r, after insertion of Explanation 1 to Section 271(1)(c), the onus is on the assessee to show that there was no intention of concealment and not on the revenue. Mens rea was considered to be a necessary ingredient for levy of penalty as laid down by the Supreme Court in CIT Vs Anwar Ali (1970) 76 ITR 696. But after the introduction of Explanation 1 to Section 271(1)(c), the Hon ble Supreme Court held that the requirement of proof of Mens rea on the part of the Revenue, would no longer be necessa .....

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n interpretation of law were also invariably subjected to penalty by relying on the Explanation. The various Hon ble High Courts in the country understood the effect of the Explanation differently often leading to conflicting decisions. In this context two landmark judgments were given by Apex Court in Dilip N. Shroff Vs Joint CIT (2007) 291 ITR 519 (SC) and T. Ashok Pai Vs CIT (2007) 292 ITR 11 (SC), which spell out mainly the following rules for the purpose of penalty imposable: (i) Both the e .....

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show that there is primary evidence to establish that the assessee had concealed the amount or furnished inaccurate particulars and this onus is to be discharged by the department. (iv) The Assessing officer while considering levy of penalty should consider whether the assessee has been able to discharge his part of the burden. He should not begin with the presumption that the assessee is guilty. (v) Though penalty proceedings under the income-tax law may not be criminal in nature, they are sti .....

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ld by Supreme Court in K.C. Builders Vs ACIT . (2004) (265 ITR 562) (SC) that deliberateness is implied in the concept of concealment. 5.3 We further find that after the decision laid down in Dilip N. Shroff (Supra), T. Ashok Pai (Supra) in a dispute under Central Excise Law the Apex Court in the case of UOI Vs Dharamendra Textile Processors (2008) (306 ITR 277) (SC) held that default merited penalty without having to consider any intend of the assessee to evade tax. The Mens rea is essential on .....

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p N. Shroff's case except for its mention of Mensrea therein. 5.5 It is also pertinent to mention here that after the ruling of Dharamendra Textile Processor, the Hon ble Supreme Court has come out with the ruling in 2 different case of CIT Vs Atul Mohan Bindal (2009) (317 ITR1) and UOI Vs Rajasthan Spinning & Weaving Mills (2010) (1GSTR66) (SC) and have given a finding that that for applicability of Section 271(l)(c) the conditions stated therein must exist. Even in the recent decision .....

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clear that the legislature did not intend to impose penalty on every assessee whose claim was rejected by the assessing officer. What is sought to be covered under Section 271(1)(c) is concealment of particulars of income or furnishing of inaccurate particulars of income and not making of an untenable claim. 5.8 From the various judicial precedents it is seen that the facts and circumstances in each case has to be seen in the context and then penalty provision should be applied to see whether t .....

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he CA. Hence penalty on the ground of concealment of particulars of income could not have been levied. 510. Alternatively, whether any inaccurate particulars were filed, was examined on the basis of the facts relating to each disallowance. Regarding the disallowance of claim of Additional depreciation allowance under Section 32(1)(iia), we find that there is no dispute about the fact that assessee had acquired certain plant and machinery which was owned by the assessee and was also put to use du .....

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eciation allowance in the subsequent years. Thus, in view of the above, it is evident that in view of debatable nature of the issue, it cannot be held that inaccurate particulars were filed by the appellant, since the claim of the appellant regarding depreciation allowance was on a different interpretation of the term installed capacity as compared to the view taken by the Ld. AO. It is evident that such a view could be debatable and hence in the absence of any inaccuracy in the claim of the app .....

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