Gujarat High Court
Commissioner Of Income Tax vs Amoli Organics P. Ltd....Opponent(S) on 22 April, 2014
Author: Sonia Gokani
Bench: Akil Kureshi, Sonia Gokani
O/TAXAP/344/2014 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 344 of 2014
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COMMISSIONER OF INCOME TAX....Appellant(s)
Versus
AMOLI ORGANICS P. LTD....Opponent(s)
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Appearance:
MR SUDHIR M MEHTA, ADVOCATE for the Appellant(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MS JUSTICE SONIA GOKANI
Date : 22/04/2014
ORAL ORDER
(PER : HONOURABLE MS JUSTICE SONIA GOKANI)
1. Following substantial question of law is raised by the Revenue in the present tax appeal arising from the order of the Income Tax Appellate Tribunal('the Tribunal" for short) dated 23.8.2013 :
"(1) Whether in law and on the facts and circumstances of the case, the ITAT was justified in deleting the penalty levied under section 271(1)(c) amounting to Rs.19,47,164/ without considering the fact that the assessee consciously made the claim of undue deduction under section 35(2AB) amounting to Rs.53,37,610/ in the return of income even though it did not receive the requisite certificate in the Form 3CD from the prescribed authority?"Page 1 of 4
O/TAXAP/344/2014 ORDER
2. We have heard learned counsel Shri Sudhir Mehta and with his assistance examined the material on record. The question concerns the deletion of penalty levied under section 271(1)(c) of the Income Tax Act, 1961 ("the Act" for short). The respondent assessee a manufacturer of active pharmaceutical ingredients had claimed a deduction under section 35(2AB) amounting to Rs.55.98 lakhs (rounded off) in the return of income. The assessee had incurred expenditure on scientific research and development. When asked to produce the letter of approval in the prescribed format, being the Form No.3 CM to be issued by the Secretary Department of Scientific and Industrial Research, Ministry of Science & Technology, the two letters had been furnished by the assessee before the Assessing Officer issued by the said department. On the ground that the letters were not in prescribed proforma as was the requirement of law, the claim was disallowed and penalty proceedings had been initiated by the AO under section 271(1)(c) of the Act.
3. On the ground that the assessee had suo motu made adjustments in the claim resulting into main addition, the Assessing Officer on the ground that inaccurate particulars of income had been furnished by the assessee, initiation of penalty proceedings was made.
4. When challenged before the CIT(Appeals), it had held in favour of the assessee. CIT(Appeals) held that penalty proceedings are distinct and separate from the quantum proceedings. First time AO had disallowed the claim of deduction under section 35(2AB). On scrutiny assessment, Page 2 of 4 O/TAXAP/344/2014 ORDER respondent withdrew such claim as CIT(Appeals)'s decision was against respondent. CIT(Appeals) held that the respondent neither concealed income nor furnished inaccurate particulars.
5. The Revenue when approached the Tribunal, it concurred with the findings of the CIT(Appeals) on the ground that it would have been ideal if the certificate issued by the Ministry of Science and Technology would have been furnished. However, on the expenditures made by the assessee for the purpose of Scientific Research and Development, no doubt was raised at any point of time by the Revenue. Tribunal was of the opinion that on a bona fide belief, when on the basis of certificates/letters, such claim could be made however, there was no question of levying penalty as there was nothing to indicate that the assessee had failed to furnish the requisite particulars.
6. Therefore, the present appeal is filed raising the afore mentioned substantial question of law.
7. We are of the opinion that no indulgence is necessary in the reasonings arrived at by both the CIT(Appeals) and the Tribunal who have rightly held that this is not a question of furnishing inaccurate particulars or concealing income.
8. In the scrutiny assessment under section 143(3) of the Act, respondent withdrew such claim since it had failed in such challenge before the CIT(Appeals) by then. On a bona fide belief that the letters issued by Ministry of Science and Technology were valid for it to claim deduction under Page 3 of 4 O/TAXAP/344/2014 ORDER section 35(2AB), if expenses incurred genuinely had been claimed in the return, rejecting the claim may not result into penalty proceedings nor would the withdrawal of claim in scrutiny proceedings in the aforementioned background can be said to be concealment.
9. This being a case, no substantial question of law arises.
10. Tax Appeal is dismissed (AKIL KURESHI, J.) (MS SONIA GOKANI, J.) raghu Page 4 of 4