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| The Tax Publishers2019 TaxPub(DT) 2368 (Karn-HC) INCOME TAX ACT, 1961
Section 271(1)(c) r/w Section 10B
Where penalty imposed under section 271(1)(c) was set aside by the Tribunal on additions made under section 10B being excess deduction claimed by the assessee and also claiming excess stock, which had neutral effect, as in next year it would be opening stock, after arising a finding of facts, there was no substantial question arose from order of Tribunal.
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Penalty under section 271(1)(c) - Validity - Additions made on account of excess deduction under section 10B and excess stock claimed in accounts -
The reason for which penalty in question was imposed by the Assessing Authority in the present case was on account of the excessive deduction claimed under section 10B which was set aside by the Tribunal, following the decision of this Court in the case of 'CIT v. Tata Elxsi Ltd. 2011 TaxPub(DT) 1960 (Karn-HC) : (2011) 349 ITR 98 (Karn) Another ground on which the penalty was imposed by the Assessing Authority was the additions made in the income on account of alleged excess stock, holding which too was set aside by the Tribunal vide Paragraph-17 of the impugned order holding that the said alleged excess stock was not as a result of purchases made outside the books of accounts, but was only on account of wrong entries in the books of accounts and in any case the higher stock in trade declared as closing stock in a particular year would be taken as opening stock at the beginning of the next year and therefore the tax effect of such alleged excess stock is 'Nil' and thus it being a tax neutral entry, the Tribunal found that there was no concealment on the part of the assessee, attracting penalty under section 271(1)(c). Held: Since the Tribunal has reiterated the findings of facts that both the additions made to the income of the Assessee having been set aside following the decision of the High Court in the case of Tata Elxsi Ltd. as far as issue of section 10B was concerned and on the issue of excess stock being tax neutral, such cogent and reasonable findings of facts returned by the Tribunal and consequentially setting aside the penalty under section 271(1)(c), does not give rise to any substantial question of law requiring the consideration by this Court under section 260-A.
Distinguished :MAK Data (P) Ltd. v. CIT - II' 2013 TaxPub(DT) 2358 (SC) : (2013) 38 taxmann.com 448 (SC)Affirmed :Tribunal, dated 29-12-2016 order passed in ITA Nos. 782 to 785/Bang/2014 in 'Deputy CIT v. M/s. Deccan Mining Syndicate Pvt. Ltd.,' for assessment years 2007-08 to 2010-11
REFERRED : CIT v. Manjunatha Cotton & Ginning Factory & Ors. 2014 TaxPub(DT) 0202 (Karn-HC) :(2013) 359 ITR 565 (Karn)
FAVOUR : In assessee's favour.
A.Y. : 2007-08
IN THE KARNATAKA HIGH COURT
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