M/S SHIVALIK ENTERPRISES ,SHIMLA vs. ITO, W-1, SHIMLA

The captioned appeals have been preferred by the Revenue against the order dated 17/07/2017 of Commissioner of Income Tax (Appeals), [hereinafter referred to as 'CIT(A)'], Shimla, H.P. relating to the cancellation of penalty levied by Assessing officer u/s 271(l)(c) of the Income-tax Act. 1961 (in short 'the Act').

The brief facts relating to the issue in the above appeal is that the assessee claimed deduction u/s 80IC of the Act @100% on account of substantial expansion of the Unit. The Assessing officer, however, denied the claim observing that assessee once had availed the deduction u/s 801C at the time of establishment of unit and thus was not entitled to 100% deduction subsequently on account of substantial expansion. The Ld. Assessing officer also initiated penalty proceedings and levied penalty u/s 271(l)(c) of the Act on account of wrongful claim of deduction on this issue.

The Ld. C1T(A), however, deleted the penalty observing that it was not a case of furnishing of inaccurate particulars of income on concealment of income which is the pre- condition for levy of penalty u/s 271(l)(c) of the Act. The Revenue is, thus, in appeal before us agitating the above action of the CIT(A) in deleting the impugned penalty.

At the time of hearing none appeared on behalf of the assessee.

We have considered the rival submissions, and it may be observed that the issue on merits regarding allowability of claim of deduction u/s 80IC of the Act @ 100% on account of substantial expansion of the unit has been settled by the Hon'ble Jurisdictional High Court of Himachal Pradesh vide their order dated 28.11.2017 in the group of cases with the head case titled as M/s Stovekraft India Vs, CIT, of 2015 wherein the Hon'ble High Court has held that the assessee as per the provisions of the Act is entitled to claim deduction u/s 801C of the Act on account of substantial expansion of the unit. Even otherwise, we do not find that this is a case of furnishing of inaccurate particulars of income or concealment of income. The assessee under the bonafide belief claimed the deduction u/s 80IC of the Act.

In view of this, we do not find any infirmity in the order of Ld. CIT(A) in deleting the aforesaid penalty in the present appeal. There is no merit in the appeal of the Revenue and the same is hereby dismissed.