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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
This appeal is filed by the assessee against the order passed by the Commissioner of income-tax (Appeal)-2, Thane, [the learned CIT (A)] dated 26th February, 2018 for A.Y. 2012-13 under Section 271(1)(c) of the Income-tax Act, 1961 (the Act), wherein penalty of Rs. 2,81,54,000/- was levied. The assessee has raised following grounds of appeal;-
“Ground I: Levy of penalty under Section 271(1) (c) of the Act: Rs. 2, 81, 51,400/-
1.1 The learned Commissioner of Income-tax (Appeals) 2, Thane ['CIT(A"] has erred in law and on 1.2 The learned CIT(A) has erred in holding that the appellant has furnished inaccurate particulars of income by claiming deduction under section 80IA on interest income The learned CIT(A) failed to appreciate that, the deduction under Section 801A of the Act was claimed based on various judicial precedents, and (ii) penalty cannot be levied where there exists difference of opinion.
1.3. The learned CIT (A) has erred in holding that appellant has concealed income by claiming excess deduction under section 80IA. The CIT (A) failed to appreciate that the interest income of Rs 8,67,66,538 was clearly reflected in the audited financial statements of the Appellant and hence, there is no question, of concealment of income.
1.4 Without prejudice to the above, the learned CIT (A) has failed to appreciate that penalty cannot be levied in absence of any additional tax liability on account of reduction in benefit under Section 80IA of the Act (i.e., the tax sought to be evaded as per the law prevailing during the relevant period) as the tax liability continues to be payable on book profits as computed under the provisions of Section 115JB of the Act.”
Brief facts of the case shows that assessee field its return of income for the impugned A.Y. 2012-13 on 30th November, 2012 at a income under the normal
Assessee is aggrieved with the action of the learned Assessing Officer in not granting deduction under Section 80IA of the Act on interest on income tax refund of Rs. 2,35,18,687/- in the normal provision and therefore, appeal was filed before the learned CIT (A).
On appeal before the learned CIT (A), he found that assessee has claimed deduction under Section 80IA of the Act on interest on Fixed Deposit of ₹8,67,66,538/- which is also not eligible for deduction under Section 80IA of the Act and therefore, the notice for enhancement was issued and consequently, he passed an order with the above enhancement.
He also issued notice under Section 274 read with section 271 (1) (c) of the Act on 31 October 2017 with respect to the enhancement. He was of the view that assessee has furnished inaccurate particulars of income.
In response to notice, assessee submitted several judicial precedents, which held that if the amounts are parked in fixed deposits on accounts of business requirement then the interest earned is eligible for deduction under Section 80IA of the Act. Assessee submitted that the tariff
The learned CIT(A) rejected the contention of the assessee and held that interest received on fixed deposits and income tax refund are not eligible for deduction under Section 80IA of the Act in view of the decision of Supreme Court in case of Liberty India Vs. CIT 317 ITR 218, therefore, the claim of the assessee is not tenable. By claiming such excess deduction, assessee has filed inaccurate particulars of income with respect to the FDR interest income of ₹8,67,66,538/- which is not derived from undertaking, he levied the penalty of Rs. 2,81,51,400/-, against this assessee is in appeal before us.
We have heard the rival parties and considered the order of the learned lower authorities.
In the present case, assessee has filed a paper book containing 34 pages. Assessee referred license agreement with JNPT and decision of the Hon'ble Bombay High Court in writ petition no. 1410 of 2012, where the assessee has
It is also the fact that disallowance of deduction under Section 80IA of the Act on interest on Income tax refund was initiated by the learned Assessing Officer as the addition was made in order under Section 143(3) of the Act. Vide order dated 18 March 2019, proceedings initiated under Section 271(1) (c) of the Act by the learned Assessing Officer was dropped.
Assessee also submitted copy of the notice issued under Section 274 read with section 271 of the Act dated 31 October 2017 issued by learned CIT (A)-2, which is placed at page no. 34 of the Paper Book. It clearly shows that none of the twin charges was cancelled / strikes off by the
The quantum addition confirmed by the ITAT was challenged before the Hon'ble High Court and same was admitted in of 2021 which was posted for final hearing on 13th January, 2022 vide order dated 14th December, 2021. Thus, it was also stated when the issue is pending before the Hon'ble High Court it became debatable issue and penalty cannot be levied.
It was also stated that even after the addition confirmed by the co-ordinate Benches on the quantum proceedings, the income of the assessee is still assessed under Section 115JB of the Act. Circular dated 31 December 2015 was referred to that in cases prior to 1 April 2016 as any adjustment is made, the penalty cannot be levied under Section 271(1) (c) of the Act. Even on this ground, also penalty requires to be deleted.
In view of the above arguments, where individually these arguments are tested for levy of penalty levied by learned CIT (A), penalty order suffers from severe infirmities.
However following the decision of full Bench of Hon'ble Bombay High Court in Mohd. Farhan A. Shaikh V DCIT [2021] 125 taxmann.com 253 (Bombay)/[2021] 280 Taxman 334 where in it is held that Where assessment order clearly records
Accordingly, we quash the penalty levied by the learned CIT (A) amounting to ₹2,81,51,400/- under Section 271(1) (c) of the Act.
Accordingly, the appeal of the assessee is allowed.
Order pronounced in the open court on 18.07.2022.