DCIT, CIRCLE- 22(1), NEW DELHI vs. SANDEN VIKAS INDIA LTD., NEW DELHI

This appeal is preferred by the Revenue against the order dated 9.8.2017 passed by the Ld. CIT (Appeals)-8, New Delhi for assessment year 2012-13 wherein, vide the impugned order, the Ld. CIT (A) has deleted the penalty of Rs. 27,29,273/- imposed u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as "the Act").

2.0 Brief facts of the case are that the assessee company had filed its return of income declaring a loss of Rs. 25,32,24,671/-.

Assessment year 2012-13 The assessment was framed u/s 143(3) after making a disallowance of Rs. 84,12,000/- being excess claim of deduction u/s 35(2AB) of the Act. During the course of assessment proceedings, the Assessing Officer noticed that the assessee had claimed a deduction of Rs. 2,069.26 lakh u/s 35(2AB). However, it was later found that the Department of Science and Industrial Research (DSIR), Ministry of Science & Technology, Government of India had accorded approval for lesser amount of assessee’s application for recognition of the in-house Research & Development facilities of the company. As a result of the approval, the claim of deduction was restricted to Rs. 1893.92 lakh and Rs. 84.12 lakh was disallowed by the Assessing Officer as being excess deduction claimed and added to the total income of the assessee. Penalty proceedings were also initiated on this disallowance of deduction claimed for filing inaccurate particulars of income and, subsequently, after considering the reply of the assessee, penalty of Rs. 27,29,273/- was imposed by the Assessing Officer.

2.1 The assessee’s appeal against the penalty imposed was allowed by the Ld. CIT (A) and the penalty was deleted after noting that an identical penalty in assessee’s own case for Assessment year 2012-13 assessment year 2010-11 was deleted by the ITAT Delhi Bench in vide order dated 11.12.2017.

2.2 Now, the department is in appeal against the deletion of penalty by the Ld. CIT (A) and has raised the following grounds of appeal:-

“1. That the Ld. CIT(A) erred in deleting the penalty u/s 271(1)(c) of Rs. 27,29,273/- without appreciating the fact that in the ROI, the assessee has not mentioned any note regarding the pending approval from DSIR whereby the DSIR did not approve Rs. 84.12 lakhs for the purpose of deduction u/s 35(2AB).”

3.0 The Ld. Sr. DR placed extensive reliance on the order of the Assessing Officer and vehemently argued that the assessee had filed inaccurate particulars of income by claiming wrong deduction u/s 35(2AB) and therefore, the penalty had been rightly imposed.

4.0 In response, the Ld. AR placed on record a copy of ITAT’s order in assessee’s own case for assessment year 2010-11 and submitted that on identical facts, the ITAT Delhi Bench had upheld the order of the Ld. CIT (A) in deleting an identical penalty in assessment year 2010-11.

5.0 We have heard the rival submissions and have perused the material available on record. Although the Ld. Sr. DR has argued vehemently against the action of the Ld. CIT (A) in deleting the 3 Assessment year 2012-13 penalty, we find that the issue is covered in favour of the assessee by the order of the ITAT Delhi Bench in assessee’s own case for assessment year 2010-11 in wherein, vide order dated 11.12.2017, the ITAT had deleted identical penalty by observing that the impugned penalty was levied only with reference to the amount of deduction claimed by the assessee u/s 35(2AB) of the Act. The Coordinate Bench has noted that the amount of the deduction was affected due to certain expenses having been incurred by the assessee which were not approved by the DSIR. It has also been noted that the disapproval by the DSIR for such expenses came at a later date than the filing of return of income and, therefore, it should not be inferred that the assessee had concealed its income or furnished inaccurate particulars of income. The Ld. Sr. DR was also not able to point out any judicial precedent to the contrary in this regard and, therefore, on identical facts, respectfully following the decision of the Coordinate Bench in assessee’s own case for assessment year 2010-11 as aforesaid, which has duly been noted and followed by the Ld. CIT (A) also while deleting the impugned penalty, we find no reason to interfere with the findings Assessment year 2012-13 recorded by the Ld. CIT (A) and accordingly, we dismiss the grounds raised by the department.

6.0 In the result, the appeal filed by the department stands dismissed. Order pronounced in the open court on 23rd October, 2018.