The Commissioner of Income Tax vs Abdul Rahman Industries

P.P.S. Janarthana Raja, J

The above Tax Case Appeal is filed by the Revenue against the order of the Income Tax Appellate Tribunal, Chennai �A� Bench, dated

15.03.2005, made in ITA No. 2015 (Mds.) / 2004 by raising the following question of law:

Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that penalty u/s 271(1)(c) could

not be imposed even though the assessee had made a false claim for deduction u/s 80HHC on sundry balances written back which could not be

considered as profits of export business and in any case 90% of such receipts had to be reduced from the profits of business while computing the

deduction u/s 80HHC of the Income Tax Act?

The assessee is a partnership firm engaged in the business of export of shoe uppers. The relevant assessment year is 1993-1994 and the

corresponding accounting year ended on 31.03.1993. The assessee had filed its return of income on 15.12.1994 showing the total income as

�Nil� and the same was processed by the Assessing Officer u/s 143(1)(a) of the Income Tax Act and the total income was determined at No.

10,89,460/-. Later on, the assessment was taken up for scrutiny. The assessment was completed u/s 143(3) of the Act determining the income at

Rs. 9,59,197/-. While completing the assessment, the assessing officer found that the assessee had credited a sum of Rs. 9,59,197/- under the

head ""Sundry Credit Balance Written Back"" to the profit and loss account and in that process, the assessee had increased his business profits and

claimed deduction u/s 80HHC. Therefore, the assessing officer excluded the same from the business income for the purpose of computation of

deduction u/s 80HHC of the Act. The assessing officer, while computing the assessment, was of the view that the assessee had concealed the

particulars of income and furnished inaccurate particulars by making a false claim u/s 80HHC of the Act and therefore, levied penalty of Rs.

4,29,720/- being 100% of the tax on the concealed income. Aggrieved by that order, the assessee has filed an appeal before the Commissioner of

Income Tax (Appeals) X, Chennai. The Commissioner, while allowing the appeal, held that the assessee has made a wrong claim u/s 80HHC and

therefore, confirmed the levy of penalty u/s 271(1)(c) of the Act. Aggrieved by the same, the assessee has filed an appeal before the Income Tax

Appellate Tribunal. The Tribunal, by its order dated 15.03.2005 deleted the penalty and set aside the order of the Commissioner of Income Tax.

Aggrieved by that order, the Revenue has filed the present appeal.

The present appeal is relating to levy of penalty u/s 271(1)(c) of the Act. The assessing officer levied the penalty on the basis of the addition of

Rs. 9,59,173/-. As against the quantum appeal, the Tribunal deleted the addition by an order dated 15.03.2005 in ITA No. 2015 of 2004.

Aggrieved by the said quantum, the revenue filed TC. No. 2245 of 2008. This Court, by its order dated 12.01.2009, dismissed the appeal filed by

the revenue.

It is fairly stated by the learned Counsel appearing for the revenue that the basis for levying penalty has been set aside by this Court by an order

dated 12.01.2009. Therefore, we are of the view that the Tribunal is right in deleting the penalty and we do not find any error or illegality in the

order of the Tribunal warranting interference. In these circumstances, no question of law much less substantial question of law arises for

consideration. Accordingly, the Tax Case Appeal is dismissed.