INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Leviability - Addition of wrong claim under section 80-IB made by assessee in the return & surrendered during scrutiny proceedings -

Assessee claimed deduction under section 80-IB(4) which was disallowed by AO CIT(A) allowed the partial relief in respect of additions made by AO towards disallowances of deduction claimed under section 80-IB(4). However, claim in respect of profit derived from trading activity, as well as export incentive/DEPB reimbursement was disallowed. Thereafter, AO initiated penalty proceedings under section 271(1)(c) on account of wrong deductions claimed under section 80-IB(4) towards trading profit, as wells as DEPB license. Held: On perusal of the reasons given by the assessee for making a claim of deduction under section 80-IB(4), assessee was prompted to go for making a claim as per the report of auditor given in Form 10CCB, which was a bonafied mistake and the same cannot be considered as a deliberate attempt made for concealment of particulars of income to levy penalty under section 271(1)(c). Similar view was expressed by Supreme Court in case of CIT v. Price Waterhouse Coopers [(2012) 348 ITR 306 (SC) : 2012 TaxPub(DT) 2967 (SC)] where assessee had made a claim on the basis of tax audit report of auditor and the same was found to be not allowed and AO had made additions. Mere making a claim, which was not substantiated that too on the basis of report of auditor could not be considered as concealment of particulars of income. Claim made by assessee towards deduction under section 80-IB(4) was a bona fide mistakes, for which the penalty provisions provided under section 271(1)(c) could not be invited.

Followed:Price Waterhouse Coopers (P.) Ltd. v. CIT - I (2012) 348 ITR 306 (SC) : 2012 TaxPub(DT) 2967 (SC) CIT v. Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158 (SC) : 2010 TaxPub(DT) 1683 (SC)

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2007-08

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