THE COMMISSIONER OF INCOME TAX vs. M/S. GOA CARBON LTD.

IN THE HIGH COURT OF BOMBAY AT GOA TAX APPEAL NO. 26 OF 2010 THE COMMISSIONER OF INCOME TAX ... Appellant Versus M/S. GOA CARBON LTD. ... Respondent Mrs. Asha Dessai,Advocate for the Appellant. Coram:- A. S. OKA & F. M. REIS, JJ. Date:- 24th June, 2010 P.C: We have heard the learned Counsel appearing for the Appellant. 2. This appeal is preferred by the appellant under section 260/A of the income Tax Act,1961. The appeal arises out of the penalty proceedings under section 271(1)(c) of the said Act. 3. The respondent/assessee filed return for the assessment year 2003-2004. In the return, deduction under section 80HHC of the said Act was claimed by the respondent/assessee, in respect of Calcined Petroleum Coke. The Assistant Commissioner of Income Tax in the scrutiny of the return, rejected the claim of deduction under section 80HHC. The claim was rejected on the ground that the product calcined petroleum coke is a mineral oil mentioned in sub-section 2(b) of section 80HHC and, therefore, penalty proceedings under section 271(1)(c) were initiated for furnishing inaccurate particulars of income by making an ineligible claim of deduction under section 80HCC. It was alleged that there was a concealment of income. The appeal arising out of the quantum appeal is pending in this Court. After the claim of deduction under section 80HHC was disallowed, the penalty proceedings were initiated.

The Assistant Commissioner of Income Tax held that as the assessee claimed deduction in respect to calcined petroleum coke by contending that Section 80HHC was applicable, the Assessee has furnished "inaccurate particulars of income towards wrong claim of deduction and hence concealed its income." Penalty of Rs.24,84,400/- was imposed by the Assistant Commissioner of Income-Tax. 4. An appeal was preferred by the respondent/assessee against the said order. The Commissioner of Income Tax (Appeals) held that penalty cannot be imposed.. The Commissioner held that the claim for deduction under section 80HHC was raised by the Assessee under a honest belief that the deduction was available and in fact the said claim was made after furnishing all necessary particulars of the income. An appeal was preferred by the appellant before the Income Tax Tribunal against the order by which the order imposing penalty was set aside by the Commissioner. 5. What has been held by the Income Tax Tribunal in the impugned order is that this was a case where allowance was claimed by the Assessee which was not accepted on merits. A finding of fact was recorded by the Tribunal that all details of the income were furnished by the respondent/assessee. The Appellate tribunal held that this was not a case where inaccurate particulars were supplied or that there was concealment of income. It was held that a legal contention was raised for claiming deduction under section 80 HHC which was not accepted by the authorities. Therefore, the Commissioner of Income Tax as well as the Appellate Tribunal held that proceeding under section 271(1)(c) was not attracted. 6. We are satisfied that in this case after fully disclosing details of income, a legal claim for entitlement of deduction under section

80HHC which has not been accepted. For raising a legal claim after disclosing all particulars of income, section 271(1)(c) will not be attracted. 7. In view of the concurrent findings of fact recorded by the Commissioner of Income Tax and the Appellate Tribunal, no substantial questions of law arises and the appeal is therefore dismissed. A. S. OKA, J. F. M. REIS, J. ap/-