M/S. GITWAKO FARMS (INDIA) PVT. LTD.,DELHI vs. DCIT, NEW DELHI

Briefly stated, the facts of the case are that the assessee filed return on 28.10.2005 declaring income of Rs.3.06 crore. Assessment was completed u/s 143(3) at Rs.3.31 crore by disallowing deduction claimed by the assessee u/s 80IB of the Act. Thereafter, penalty was imposed u/s 271(1)(c) in respect of such disallowance which came to be approved by the ld. CIT(A). The assessee is aggrieved aginst the countenance of such penalty.

We have heard both the sides and perused the relevant material on record. It is seen that the claim of the assessee for allowing deduction u/s 80IB came to be allowed by the Assessing Officer from assessment year 1996-97 to 2003-04. It was for the first time that such a claim was rejected in the order passed for the assessment year 2004-05 which was followed for the assessment year 2005-06 as well. The Tribunal allowed the assessee’s appeal on this issue for the assessment year 2004-05. A copy of such order dated 20.02.2009 is available on record. For the assessment year 2005-06 also, the Tribunal accepted the assessee’s claim and allowed deduction u/s 80IB. It is observed that the Tribunal order for the assessment year 2004-05 came up for consideration before the Hon'ble High Court and the same got overturned. Thereafter, in a miscellaneous application filed by the Revenue, the Tribunal accepted the departmental case and modified its order denying the benefit of deduction u/s 80IB for such year. Be that as it may, it is seen that when the assessee filed its return on 28.10.2005 for the year under consideration, the admissibility of deduction u/s 80IB was an established position inasmuch as the Assessing Officer had himself allowed such deduction for various years upto 2003-04. It was only pursuant to the judgment of the Hon'ble Delhi High Court in the assessee’s own case for assessment year 2004-05, which was delivered on 18.02.2011, that the claim of deduction got jeopardised. This shows that at the time of filing the return on 28.10.2005, the admissibility of such a deduction was an acceped position and consequently the assessee was under a bona fide belief about the allowability of such deduction on the basis of such claim being allowed in the past. The mere fact that such a claim now stands 3 negatived in quantum proceedings cannot lead to imposition or confirmation of penalty u/s 271(1)(c) because on the date of filing the return, the assessee neither concealed its income nor furnished inaccurate particulars by claiming such a deduction. We, therefore, overturn the impugned order and delete the penalty imposed u/s 271(1)(c) of the Act.

In the result, the appeal filed by the assessee is allowed.