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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
The present Appeal filed by the assessee is against the order of Commissioner of Income Tax (Appeals)-20, Mumbai (‘CIT(A)’) dated 15.09.14 for AY 2008-09 confirming the penalty levied by Assessing Officer (‘AO’) under section 271(1)(c) of the Act. 2. The only issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO in disallowing the claim of 80IB of the Act. The grounds raised by assessee reads as under: - “1. The learned Commissioner of Income Tax (Appeals) erred in levying penalty under section 271(1)(c) by holding that the appellant had furnished incorrect taxable income by way of claiming excess deduction under section 80IB of ₹ 1,20,24,581/- and while doing so he amongst other failed to appreciate that: a. The appellant had neither concealed the particulars of its income nor had it furnished inaccurate particulars of income; b. The claim of deduction under section 80IB was made under a bonafide belief that the appellant was eligible for deduction of the entire income of the industrial undertaking; and c. The items of income on which the deductions u/s80IB was allowed by the Hon’ble ITAT in the earlier year were required to be excluded while calculating the quantum of penalty leviable. d. The items of income on which the deductions under section 80IB
Hon’ble ITAT were debatable in nature as on the date when the appellant filed its return of income. e. The deduction under section 80IB was 30% of the eligible profit as applicable in appellants case and hence, the quantum of penalty also needs to quantified accordingly.”
Brief facts of the case are that the assessee is engaged in the business of manufacturing of different kinds of glasses and other sources and claimed the deduction u/s 80(IB) of the Act. The company filed its returned of income on 30-09-2008 and declaring a total income of ₹ 4,08,27,750/-. The AO passed the assessment order under section 143(3) of the Act and assessed the total income to ₹ 5,11,69,120/- by making addition and disallowance to the total income, while passing assessment order the learned Counsel for the assessee has claimed income from other sources of ₹ 3,74,86,262/- as profit derived from Industrial undertaking and has claimed deduction us/ 80IB of the Act and AO levied penalty of ₹ 40,87,154 under section 271(1)(c) of the Act vide order dated 26-03-2013. Aggrieved, assessee preferred the appeal before CIT(A), who after considering all the facts of the case held that assessee has furnished inaccurate particulars of income and the CIT(A) confirmed the levy of penalty by observing in Para 4.3 reads as under: - “4.3. I have considered the finding of the Assessing Officer for levy of penalty of ₹ 40,87,154/- and rival submission of the appellant, carefully. The issue under appeal is altogether in the facts and circumstances of the case penalty u/s.271(1)(c) can be levied or not. It is pertinent to mention that appellant has willfully claimed wrong deduction, hence is liable for penalty u/s.271(1)(c) of the I.T. Act. I find that the Ld. CIT(A) while deciding the quantum appeal has confirmed the disallowance of excessive claim of deduction to the extent of ₹ 3.27,61,704/- vide order No. CIT(A)-20/ACIT/9(3)/IT-340/10- 11 dated 22.09.2011, hence Assessing Officer is perfectly right in reaching to the conclusion that assessee has willfully furnished inaccurate particulars of income to evade the tax by including other income while computing the eligible profit uls.8018. The argument of the A.R. that the claim for damage was towards production loss, and similarly loss of spares and opportunity loss is related to business, hence accordingly to him such loss was to be allowed, is not convincing argument because of the reason that such claim of damages had never been established by the appellant either before the Assessing Officer or before the appellate authority. In this proceeding also nothing has been established, and merely general arguments has been advanced. Therefore, the finding of the CIT(A) that such expenditure is not only is of capital nature but little premature, is still uncontroverted one. Therefore, it is very evident that appellant has wrongly claimed such damage expenses without establishing genuineness of such claim, hence appellant is liable for penalty for furnishing of inaccurate particulars of income. Further, assessee has wrongly claimed insurance income of 7.33,39,736/- and sundry credit balance written back of Z .49,72,84,!- as profit of the industrial undertaking. The Hon'ble ITAT in the appellant's own case in I.T.A.No.1661/Mumbai 2010 AY 2006-07, order dated 23.9.2011 has very categorically held that such insurance income is not at all a profit derived from Industrial Undertaking. According to the Hon'hle ITAT such insurance receipt cannot be treated as part of the income of the eligible undertaking, hence the finding of the Assessing Officer as well as CIT(A) has been confirmed.
Similarly, Hon'ble ]TAT has also confirmed the finding of the Assessing Officer as well as CITa(A) regarding sundry credit advance written back, hence it is found beyond doubt that such insurance claim receipt of .33,39,736/- and sundry credit advance written back of T. 4,97,284/-. is not at all eligible for deduction u/s.801B. Thus, it is very evident that assessee has wrongly and willfully claimed the deduction and therefore has filed inaccurate particulars of income. The I1on'ble ITAT Mumbai Bench 'A' in the case of Apex Urban Cooperative bank of Maharashtra and Goa Ltd. vs. ITO 1(1)(3), (2014) 146 lTD 791 (Mumbai Tribunal, order dated 18.09.2013) has held that if an assessee claims wrong deduction u/s.80P, is liable for penalty ufs.271(1)(c) of the I.T.Act. Similarly, in the case of Ws. Strapping Solution Pvt. Ltd. vs. ITO 9(3)(2). AY 2005-06, order dated 09.10.2013, 1-lonble ITAT has sustained the levy of penalty u/s.271(1)(c) for claiming wrong deduction u/s.80IB(4) of the I.T.Act. Further, Hon'ble Delhi ITAT
Bench 'D' in the case of Jubilant Biosys Ltd. vs. ITO Ward 4(1) New Delhi (2014) 64 SOT 99 (Delhi) AY 200405, order dated 19.5.2014 has confirmed the penalty u/s.271(1)(c) of the I.T.Act oil ground that once amount of deduction u/s.80I3 was deemed to have been already granted in computing total income, hence by virtue of explanation 4(a) to Section 271(1)(c) being amount of addition representing concealment or furnishing inaccurate particulars of income, then there could be no scope for interfering that total income representing the amount of addition would be again eligible for deduction u/s.80IB(8A). Thus, for claim of wrong deduction, levy of penalty has been confirmed by the Hon'ble ITAT. In this case also appellant has deliberately claimed wrong deduction uls.801B(4), hence is liable for penalty u/s.271(1)(c). Ld. Assessing Officer has rightly levied the penalty. Thus, in the light of the above discussion the levy of penalty of Z. 40,87,154/- is sustained.”
Again, aggrieved by the decision of CIT(A), assessee came in second appeal before Tribunal.
In the above facts, the learned Counsel for the assessee argued that the Tribunal in assessee’s own case for AY 2006-07 has allowed the claim of the assessee by observing in Para as under: -.
After perusing rival contentions and material on record, we find strength in the arguments of the Ld. AR. It is to be noted that the assessee claimed 80IB deduction towards certain items and the Tribunal uphold the major claim of the assessee which proves the point that the assessee made a claim which was bona-fide and tenable in law. Therefore, the assessee made a legally valid claim, which was accepted to a major extent. In view of the same, we are of the considered opinion that the assessee do not deserves to be saddled with the impugned penalty particularly when it derived benefit only to the extent of 30%, being deduction u/s 80-IB. Therefore, by deleting the same, we allow the assessee’s appeal.
The facts of the present case for the year under consideration are also similar to the facts of AY 2006-07. Even, in the quantum appeal filed before Hon’ble ITAT for the year under consideration, the Hon’ble ITAT in vide order dated 29-08-2017 had restored back one ground to the file of the AO and had upheld additions on the second ground. Since, the co-ordinate Bench of Hon’ble ITAT in ITA No. 2552/Mum/2013 for AY 2006-07 in assessee’s own case had deleted the penalty as detailed above. Therefore, while maintaining judicial discipline and consistency, we while respectfully following the order of the Co-
Bench also hold that assessee had made a claim which was bona fide and tenable in law and therefore, assessee do not deserve to be saddled with the impugned penalty. Therefore, by deleting the same, we allow the assessee’s appeal.
In the result, the appeal of assessee is allowed.
Order pronounced in the open court on 06-12-2017.