THE DCIT, CIRCLE-10,, AHMEDABAD vs. SHRI DEVRAJ R.AGARWAL,, AHMEDABAD

Aggrieved against the decision of the assessing officer, the assessee preferred appeal before the ld. CIT(A). The ld. CIT(A) has deleted the penalty levied by the assessing officer by observing as under:- “6.7 Consequently, the facts of the case require to be analysed in view of above judicial citations. The appellant has made a claim of deduction u/s. 80HHC of Rs. 1,15,83,644/-. While doing so, the appellant had treated turnover of only AOC, its export proprietary concern and not of all the proprietary concerns. The A O relying upon the decision in the case of International Research Laboratories, Special Bench, Delhi was of the view that turnover of all the proprietary businesses was to be included for calculating admissible deduction u/s. 80HHC and consequently made an addition of Rs. 52,67,540/- and imposed penalty thereupon. The view held by the A O in quantum proceedings was not endorsed by my Id predecessor, who relying upon the decision of hon'ble Madras High Court in the case of CIT vs Madras Motors 257 ITR 60 deleted the addition made by the A O. In appeal, hon'ble jurisdictional tribunal reversed the findings of my Id predecessor, following their own decision in appellants case for A Y 2000-01. While doing so, hon'ble tribunal is of the view that decision of Special Bench in the case of International Research Laboratories Ltd and of hon'ble Kerala High Court in the case of CIT vs Jose Thomas 253 ITR 553 is applicable. Thus, it is clear that the issue under consideration being the calculation of admissible deduction u/s. 80HHC is a debatable issue on which hon'ble courts / appellate tribunals are holding divergent opinions. Thus, seen the claim of the appellant, falls in the category of a debatable issue and cannot be equated with a claim being made upon basis of submission of inaccurate particulars. There is no malafide which can be attached, to the conduct of the appellant. Hon'ble Delhi High Court in the case of Zoom Telecom supra have laid down that so far as there is full disclosure of material on which offered income is calculated, no fault can be attached to an assessee. In this case, the appellant has made a claim u/s. 80HHC holding view that turnover of AOC only has to be included. The Id A O disagrees with appellants view, holding that turnover of proprietary concern is to be included and consequently levied the penalty u/s. 271 (1)(c). It is not a case where the appellant can be held guilty c\f concealing any particulars pertaining to his disclosed income. All the information concerning his proprietary concerns was disclosed by the appellant in the return of income. Thus, in view of the judicial citations discussed above, it is held that penalty u/s. 271 (1)(c) cannot be imposed upon the appellant. Respectfully following the judicial ratios discussed in preceding paras, it is concluded that the action of the A.O. to impose penalty u/s. 271 (1)(c) amounting to Rs. 16,36,510/- vide order dated 26-4-2011 is not correct and is not based upon correct interpretation of law. It is held that the penalty order cannot be sustained. Accordingly, the penalty imposed by the Id AO is deleted and the ground of appeal raised by the appellant is allowed.”

We have heard the Ld. DR and perused the material on record carefully. The assessing officer has allowed the deduction u/s. 80HHC of Rs. 63,16,104/- as against deduction of Rs. 1,15,83,640/- claimed in the return of income by the assessee. The assessing officer has computed the claim of the assessee for deduction u/s. 80HHC after taking into consideration the turnover of all the proprietary concerns of the assessee. In this connection, we find that the assessee has made full disclosures of all the materials on the

In the result, the appeal of the revenue is dismissed.