The Commissioner of Income Tax vs Oriental Rugs Co.

Adarsh Kumar Goel, J.—This appeal has been preferred by the revenue u/s 260A of the Income Tax Act, 1961 (for short, "the Act") against the order dated 2.4.2009 of the Income Tax Appellate Tribunal, New Delhi in I.T.A. No. 3629/Del)/08 for the assessment year 2002-03 proposing to raise following substantial questions of law:

i) Whether on the facts, and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in deleting the penalty imposed u/s 271(1)(c) on the amount of deduction claimed u/s 80IB on export incentives by holding that there was no deliberate furnishing of inaccurate particulars by the assessee, given the fact that the decision of the Hon''ble Supreme Court in Commissioner of Income Tax, Karnataka Vs. Sterling Foods, Mangalore, disallowing claim of deduction under Chapter VIA of the Act on export incentives was already available to the assessee at the time of filing of return of the income tax for Asstt. Year 2002-03, and therefore, the assessee was evidently filing inaccurate particulars of income in claiming deduction u/s 80IB on export incentives?

ii) Whether the decision of the Income Tax Appellate Tribunal to delete the penalty u/s 281(1)(c) of the Act is justified in the light of the decision of the Hon''ble Supreme Court in Liberty India Vs. Commissioner of Income Tax, whereby the non-allowability of 80IB deduction on export incentives has been re-affirmed?

iii) Whether the decision of the Income Tax Appellate Tribunal quashing the penalty order u/s 271(1)(c) on the ground that there is no deliberate concealment is justified in the light of the decision of the Hon''ble Apex Court in Union of India (UOI) and Others Vs. Dharamendra Textile Processors and Others, which has held that mens rea is not an essential ingredient for levy of penalty u/s 271(1)(c) of the Act, and that levy of such penalty is mandatory as remedy for loss to revenue, and given the fact that such loss to revenue has occurred in the instant case due to wrong claim by the assessee with respect to deduction u/s 80IB?

It is not disputed that identical appeal of the revenue being I.T.A. No. 225 of 2010 CIT v. Raj Overseas has been dismissed by this Court vide order dated 28.7.2010.

Accordingly, this appeal is dismissed.