Bombay H.C : No penalty for an instance of disallowance of a claim and not a case of concealment of income or furnishing inaccurate particulars of income

High Court Of Bombay

CIT Vs. Blue Star Ltd.

Assessment Year: 2001-02

Section : 271(1)(c), 80-IB

J.P. Devadhar And M.S. Sanklecha, Jj.

It Appeal Lodging No. 2108 Of 2012

March  7, 2013

JUDGMENT

1. In this appeal by the Revenue for the assessment year 2001-02 the following questions have been raised for our consideration.

“(i) Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in deleting the penalty levied under section 271(1)(c) in respect of disallowance made on account of curtailment of deduction under section 80-IB of the Income-tax Act, 1961 ?

(ii) Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in deleting the penalty levied under section 271(1)(c) in respect of disallowance made on account of duty draw back and dividend income from foreign companies offered to tax only when the case was selected for scrutiny ?”

2. So far as question (i) is concerned the Tribunal by the impugned order deleted the penalty imposed upon the respondent-assessee under section 271(1)(c) of the Income-tax Act. The Assessing officer curtailed the deduction claimed under section 80-IB of the Act and consequent thereto levied penalty on account of curtailment of deduction. In appeal, the Commissioner of Income-tax (Appeals) deleted the penalty. On further appeal by the Revenue, the Tribunal by the impugned order relied upon an order passed in respect of the respondent-assessee for the assessment year 1996-97 and upheld the deletion of penalty. The Tribunal also observed that the High Court had admitted an appeal on the question of law only in respect of the quantum proceeding for the assessment year 1996-97. In that view of the matter, the Tribunal followed its order for the assessment year 1996-97. The Tribunal has recorded a finding of fact that the amounts were offered to tax suo motu by the respondent-assessee and not consequent to detection by the Revenue. Therefore, we find that it was an instance of disallowance of a claim and not a case of concealment of income or furnishing inaccurate particulars of income. In these circumstances, we see no reason to entertain question (i).

3. So far as question (ii) is concerned, in the quantum proceeding, addition was made in respect of duty draw back and dividend income received from foreign companies. Consequent thereto the Assessing Officer levied penalty under section 271(1)(c) of the Act upon the respondent-assessee. In appeal, the Commissioner of Income-tax (Appeals) deleted the penalty. On further appeal by the Revenue the Tribunal held that amount of duty draw back and dividend income from foreign companies was offered to tax by the assessee voluntarily. The Tribunal returns a finding of fact that these amounts were offered to tax by the assessee on its own and not after detection on the part of the Assessing Officer. Further, the Tribunal also records that similar income was assessed for tax in the assessment year 2002-03 and the Assessing Officer chose not to impose penalty upon the respondent-assessee. In these circumstances, we see no reason to entertain question (ii).

4. Accordingly, the appeal is dismissed with no order as to costs.

[Citation: 357 ITR 669]