TMI Blog2021 (12) TMI 1320X X X X Extracts X X X X X X X X Extracts X X X X ..... honest intent. As regards the explanation 1 to section 271(1)(c) of the Act, there was no iota of evidence suggesting that the explanation offered by the assessee was false. Since the research and development facility was maintained by the assessee and the expenditures were also incurred by it, claim of the assessee cannot be said amounting to concealment of particulars of income - there was no finding of the authorities below qua the fact that the assessee fails to substantiate the explanation offered by him and fails to prove that such explanation is bonafides with respect to material facts relating to the computation of total income. Thus in our considered view the provisions of expression 1 to section 271(1)(c) of the Act cannot be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity approved by DSIR vide order dated 25-04-2008. However, the AO was not satisfied with the contention of the assessee and therefore, he confirmed the addition of the expenses claimed by it for ₹ 28,48,709/- on the reasoning that the expenses claimed by the assessee are bogus in nature vide order dated 29-10-2015 which were subsequently confirmed by the learned CIT (A). At the time of framing the assessment, the AO initiated the penalty proceedings under section 271(1)(c) of the Act on the charge of furnishing inaccurate particulars of income and finally levied the penalty of ₹ 10,42,410/- being 100% of the amount of tax sought to be evaded vide order dated 13-11-2017. 4. Aggrieved assessee preferred an appeal to the learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities below. 8. We have heard the rival contentions of both the parties and perused the materials available on record. In the present case the assessee has claimed an expenditure of ₹ 28,48,709/- relating to the research and development activity carried out by it under section 37 of the Act. The AO has made the disallowance of 100% of the expenses claimed by the assessee which was restricted to 50% amounting to ₹ 14,24,354/- by the learned CIT (A) on the reasoning that the other associated/sister concern of the assessee also availed the benefit of research and development activity carried out by the assessee. Accordingly, the learned CIT (A) was of the view that the assessee is not entitled to claim 100% deduction of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessed by the AO would amount to furnishing of inaccurate particulars of income or concealment of income. However, we note that the Hon ble Supreme Court in the case of Dilip N Shroff vs. JCIT reproetd in 161 taxman 218 has discussed the term inaccurate by observing that the word inaccurate signifies a deliberate act or omission on the part of the assessee. Thus, to arrive at the conclusion that, the assessee has furnished inaccurate particulars of income, it has to be tested whether it has been done so with the dishonest intent which cannot be regarded as an innocent act. In other words the element of consciousness in furnishing inaccurate particulars of income coupled with circumstantial evidences should be present in the particular case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee out of research and development activity. Therefore, the entire expenses cannot be allowed as deduction to the assessee. As per the learned CIT (A) the impugned expenses should also be allocated to the other units of the assessee group concern which availed the benefit of research and development activity carried out by it. 8.6 There was no doubt raised by the authorities below as far as genuineness of the expenses is concern. Undeniably research and development facility maintained by the assessee was approved by DSIR. What was doubted the quantum of the expenses by the learned CIT (A) which has led to the present penalty proceedings. Thus, to our considered view, the claim of the assessee at the most can be regarded as inaccur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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