Geeta Prints (P) Ltd. vs Assistant Commissioner of Income Tax

Akil Kureshi, J.—Tax appeal is admitted for consideration of following substantial questions of law : 1. Whether on facts and evidence on record the Tribunal is right in law in its interpretation of s. 271(1)(c) of the Act for reversing the order of CIT(A) and confirming the penalty for alleged concealment without any independent reasons ?

Whether on facts and circumstances of the case read along with evidence on record, the Tribunal''s findings and conclusion for confirming the penalty under s. 271(1)(c) of the Act is vitiated on facts and unsustainable in law ?

Learned advocate Mrs. Mauna Bhatt waives notice. Looking to the nature of dispute, we have heard the learned counsel for the parties for final disposal of the appeal forthwith without insisting for supply of paper book. 2. Issue pertains to levy of penalty under s. 271(1)(c) of the Act. The assessee had lodged certain claims. Two of these claims were declined. One pertained to consumption of coal allegedly by the assessee from the quota of GMDC. Other head of penalty was with respect to the job work charges claimed by way of deduction under s. 80HHC of the Act.

The AO imposed penalty which was carried in appeal before the CIT(A). CIT(A) reversed the order of penalty, upon which the Revenue approached the Tribunal. The Tribunal reversed the order of the CIT(A). Therefore, the present appeal has been filed.

With respect to penalty on the alleged consumption of quota of coal, we had in a separate appeal of the assessee deleted the penalty making following observations :

Having thus heard the learned counsel for the parties, insofar as the penalty relatable to the quota of coal used from GMDC is concerned, though it is true that the quantum additions have become final and the Tribunal''s judgment was not further carried in appeal, however, that must be viewed in the background of the assessee''s submission that the amount itself was not very substantial and the assessee''s financial condition was weak. We also notice that though on facts and on somewhat similar background when another assessee, viz. Krishna Textile approached this Court, theory that such assessee had not lifted any coal from GMDC, but was siphoned off through fraud was noticed by this Court in that case was also accepted.

Additionally, we find that in the subsequent year, the AO himself having verified the details appeared to have come to the conclusion that though there was record showing consumption of coal by the assessee from GMDC, the bank record suggested otherwise. In totality of the facts and circumstances of the case, we are of the opinion that penalty on this head should be deleted.

With respect to second head of addition relating to penalty, counsel submitted that the CIT(A) had given cogent reasons for deleting the penalty. It was noticed that the assessee had made full disclosures and the statutory report was also suggesting that the claim was legal. He further pointed out that the Kerala High Court in the case of Commissioner of Income Tax Vs. K. Rajendranathan Nair, K. Raveendranathan Nair and Smt. T.C. Usha, held that such claim was sustainable under s. 80HHC of the Act. He, therefore, submitted that the Tribunal committed an error in reversing the order of CIT(A).

On the other hand, counsel for the Revenue opposed the contention submitting that the assessee had made exaggerated and false claim, that the Tribunal has correctly reversed the order of CIT(A).

Having thus heard the counsel for the parties and having perused the record, it emerges that the assessee had made full disclosure about the claim. The claim was also certified by the chartered accountant. Necessary declarations in the prescribed forms were made, may be in the case of the assessee, such claim on merits was not granted. However, this does not mean that the assessee had concealed any income. Further, we find that the issue ultimately at any rate is debatable since one High Court has already held in favour of the assessee. We also find that in the case of Commissioner of Income Tax, Ahmedabad Vs. Reliance Petroproducts Pvt. Ltd., , the apex Court observed that when no information as given in return is found to be incorrect, penalty could not be imposed. It was held that making incorrect claim does not amount to concealment of particulars. In the result, we find that the Tribunal erred in interfering with the order of the CIT(A). Question No. 1 is answered in favour of the assessee. In that view of the matter, it is not necessary to answer question No. 2. Tax appeal is allowed accordingly. Judgment of the Tribunal is set aside. Appeal is disposed of.