Commissioner of Income Tax vs Lakhani India Ltd.

The revenue has preferred this appeal u/s 260A of the Income Tax Act, 1961 (hereinafter referred to as "the Act") against the order dated 28-12-2007 passed by Tribunal, Delhi Bench TT, New Delhi in ITA No. 1165/Del/2007 for the assessment year 2000-01, proposing to raise following substantial questions of law:

Whether on the facts and in the circumstances of the case, the Honble Tribunal was right in law in upholding the order of the learned OT(A) who deleted the penalty of Rs, 13,50,291 imposed u/s 271(l)(c) of the Income Tax Act, on account of excess deduction claimed by the assessee u/s 80HHC by taking whole of the profit from export unit as eligible for deduction instead of taking into account the ratio of export turnover to total turnover while computing the said deduction ?

Whether on the facts and in the circumstances of the case, the Honble Tribunal in deleting the penalty levied by assessing officer u/s 271(1)(c) in contravention of the order of the Honble Madras High Court in the case of M. Sajjanraj Nahar Vs. The Commissioner of Income Tax, and also in view of Section 271{1B) of the Income Tax Act, is correct, when the assessing officer had recorded initiation of penalty proceedings u/s 271(l)(c) in the assessment order ?

Whether the Honble Tribunal in deciding that proving contumacious intent is an essential ingredient in levy of penalty in contravention of the provisions of a civil statute like Income Tax Act in spite of there being so many judgements that breach of a civil obligation attracts levy of penalty whether the contravention was made by the defaulter with any guilty intention or not ?.

Whether on the facts and in the circumstances of the case, the Honble Tribunal is right in law in relying upon the case law in CIT v. N. Krishnan (1999) 107 Taxman 283 (Ker), when in the present case, the issue is that of book profits u/s 115JA, whereby income was assessed at a positive figure and assessed income was not loss ?

The assessing officer did not accept computation of deduction claimed by the assessee u/s 80HHC of the Act while adding back the amount wrongly claimed to be deduction, penalty was also imposed. On appeal, Commissioner (Appeals) deleted the penalty on the ground that merely, for raising a debatable issue, penalty could not be imposed, in absence of any concealment or misrepresentation by the assessee. The said finding has been affirmed by the Tribunal in following terms:

The assessee during penalty proceedings claimed that there is no concealment and the addition/disallowances has been made on account of difference of opinion. This factual matrix was not controverted by the revenue. Now the question arises whether penalty can be imposed on account of difference of opinion. The obvious reply is no because the whole problem started due to the difference of opinion, therefore, it cannot be said that the assessee furnished inaccurate particulars of income or, concealed its income which are the necessary ingredients for imposing penalty u/s 271(1)(c) of the Act. The learned Counsel for the assessee,. during arguments contended that the matter was controversial till the decision of - the Honble Apex Court in Ipca Laboratories was delivered as at the relevant time the decision in the case of (2003) 86 ITD 156; IPCA Laboratories Ltd. Vs. Deputy Commissioner of Income Tax, was in favour of the assessee. It was also pleaded that in the own case of the assessee for assessment year 1998-99, the impugned addition was deleted by the learned Commissioner (Appeals) vide order dated 12-9-2006. In the present appeal also the claim of the assessee was duly supported by certificate of chartered accountant. It is pertinent to mention here that the decision of the Bombay High Court in the case of IPCA Laboratories Ltd. (supra) was in favour of the assessee when the return was filed. However, this decision was later on reversed by the Honble Apex Court. In view of these facts, it cannot be said that the assessee concealed its particulars of income.

We have heard learned Counsel for the revenue. In view of finding concurrently recorded by the Commissioner (Appeals) and the Tribunal that there was no concealment or misrepresentation by the assessee, we do not find any fault with the impugned order setting aside the levy of penalty. No substantial question of law arises.

The appeal is dismissed.