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Income Tax Appellate Tribunal, DELHI BENCH: ‘D’ NEW DELHI
Before: SHRI N.K. SAINI & SHRI K.N. CHARY
PER SHRI K.N. CHARY, JUDICIAL MEMBER
This is an appeal by the Revenue challenging the order dated 28.03.2014 in appeal no. 0045/2012-13 passed by the Ld. Commissioner of Income Tax (Appeals)-VIII, New Delhi (hereinafter for short called as the “Ld. CIT (A)”) on the following grounds of appeal:
1. “Whether in the fact and circumstances of the case and in law, the Ld. CIT (A) erred in deleting the penalty of Rs. 13,47,914/- imposed by the AO u/s 271(1)(c ) of the Income Tax Act, 1961 for furnishing inaccurate particulars of income.
That the order of the Ld. CIT (A) is erroneous and is not tenable on facts and in law. 3. That the grounds of appeal are without prejudice to each other.
That the appellant craves leave to add, after, amend or forgo any grounds of appeal raised above at the time of the hearing.” 2. Briefly stated facts are that the assessment u/s 143(3) for the AY 2009-10 in this matter was completed on 27.12.2011 at an income of Rs. 1,07,97,833/- as against the nil income written by the assessee. During the assessment the AO found that the assessee company claimed a deduction of Rs. 1,09,82,482/- u/s 10A of the Income Tax Act, 1961 (for short called as the “Act”) and showed the income as Nil, whereas the assessee was required to compute the income u/s 115JB and should have shown that income as worked out in terms of the provisions of that said section. The AO further found that the assessee claimed excess deduction u/s 10A of the Act to the extent of Rs. 1,95,852/- on the income of Rs. 6,48,443/- earned on account of fluctuation in the value of foreign currency but was excluded by the assessee form the total turnover in the computation formula. AO assessed the income of the assessee at 1,07,97,833/- under 115JB and Rs. 1,95,852/- under normal provisions.
Penalty proceedings are initiated and penalty of Rs. 12,25,000/- was levied. In appeal on verification of the record relating to the details of the Income Tax assessments of the assessee for the last 10 years, Ld. CIT(A) found that the assessee was of the impression that, since his business was covered under STPI Act and exempt u/s 10A of the Act for 10 years starting from 2000-01, there is no need to pay any tax on normal provision or MAT Tax, but when the income was determined by the AO u/s 143(3) of the Act the assessee paid the same. Holding that the assessee was laboring under a bona fide belief that they are not required to pay any tax within the 10 years holiday years covered under STPI Act, the Ld. CIT (A) deleted the penalty. Hence, the Revenue is in appeal.
It is the argument of the Ld. DR that for the relevant assessment year the exemption is not available to the assessee, as such, the assessee cannot plead that the penalty is unjustifiable. He further submitted that in so far as the proceedings u/s 271(1)(c ) are concerned mens rea is not required. Per contra, it is the argument of the Ld. AR that in this matter only a wrong claim was preferred by the assessee under mistaken impression that since their business is covered under STPI Act and exempt u/s 10A of the Act for long 10 assessment years commencing from 2000-01, there was no need to pay any tax on normal provision or MAT Tax, but as a matter of fact there is neither concealment of income nor furnishing of inaccurate particulars thereof and nothing was unearthed by the AO during the course of assessment that was not furnished by the assessee. He, therefore, while placing reliance on the decision reported in CIT vs. Reliance Petro Products Ltd. 322 ITR 158 (SC) pleaded that penalty cannot be sustained.
4. We have perused the material papers on record in the light of the arguments addressed on either side. It is an admitted fact that nothing was unearthed during the assessment proceedings that was not produced by the assessee. It is only a matter of disallowance of exemption. The finding of the Ld. CIT(A) on this aspect is very reasonable in as much as he found that the assessee was laboring under mistaken belief that for the relevant assessment year also he need not pay any tax on normal provision or MAT Tax in as much as the business of the assessee was covered under STPI Act and exempt u/s 10A of the Act for 10 years starting from the AY 2000-01. Further, in the absence of the requirement of the AO being satisfied that there is either concealment of income or furnishing of inaccurate particulars, mere disallowance by the AO does not automatically need to the levy of penalty. While respectfully following the decision reported in Reliance Petro Products case (supra), we hold that the penalty cannot be sustained in this matter. We, therefore, while upholding the findings of the Ld.CIT (A) dismissed the grounds of appeal.
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 09.10.2017