Itxa/1909/2011 Of The Commissioner Of Income Tax -8 Mumbai v. Samsonite South Asia Pvt. Ltd

sas itxa1909-11 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1909 OF 2011 The Commissioner of Income Tax-8, Mumbai ..Appellant. V/s. M/s. Samsonite South Asia Pvt. Ltd. ..Respondent. Mr. Suresh Kumar for the appellant. Mr. Jitendra Singh with B.G. Yewale i/b. Rajesh Shah & Co. for the respondent. CORAM : J.P. DEVADHAR AND M.S. SANKLECHA, JJ. DATED : 1ST APRIL, 2013 P.C. :- 1.In this appeal by the revenue for the assessment year 2003-04, following questions of law have been raised for our consideration:- (a)Whether on the facts and in the circumstances of the case and in law, the Tribunal is correct in holding that it was not a fit case for imposing penalty for furnishing of inaccurate particulars of income u/s.27(1)(c) of the I.T. Act ?law, the Tribunal is correct in holding that it was not a fit case for imposing penalty for furnishing of inaccurate particulars of income u/s.27(1)(c) of the I.T. Act ? (b)That, whether upon declaration of law by the Supreme Court subsequent to the filing of return of income by the assessee, whether the assessee becomes duty bound to file revised return if such declaration of law is against him ?subsequent to the filing of return of income by the assessee, whether the assessee becomes duty bound to file revised return if such declaration of law is against him ? (c)If the assessee fails to do so then, whether proceedings u/s.271(1)(c) of the Income Tax Act, can lie against him ?u/s.271(1)(c) of the Income Tax Act, can lie against him ? 2.The Tribunal by the impugned order deleted the penalty imposed upon the respondent-assessee under Section 271(1)(c) of the Income Tax Act, 1961 (the Act). In its return of income, the respondent -assessee had claimed deduction u/s.80HHC of the Act without setting off brought forward losses of earlier years. In quantum proceedings, the Assessing Officer held that the claim is inadmissible in view of the Supreme Court decision in IPCA Laboratories Ltd. V/s. DCIT reported in 266 ITR 521. The respondent-assessee accepted the disallowance in the quantum proceedings. However, the Assessing Officer levied penalty under Section 271(1)(c) of the Act. 3.In appeal, the CIT(A) deleted the penalty. On further appeal by the revenue, the Tribunal upheld the order of CIT(A). In the impugned order, the Tribunal recorded that at the time whenthe respondent-assessee filed its return of income and claimed deduction without setting off brought forward losses, the same was in accordance with the decision of this Court in the matter of CIT V/s. Shirke Construction Equipments Ltd. reported in 246 ITR 429. Only subsequently, the Apex Court by its decision in IPCA Laboratories Ltd. (supra) took a different view which required setting off brought forward losses before claiming deduction under Section 80HHC of the Act. The Tribunal in the aforesaid facts held that no penalty is imposable as at the time the claim was made in the return of income the same was duly supported by the decision of the jurisdictional High Court at the relevant time. Moreover, the Tribunal also records a finding that the explanation furnished by the respondent-assessee was bonafide in line with the prevailing legal position. Further, the impugned order also place reliance upon the decision of the Apex Court in the matter of CIT V/s. Reliance Petroproducts Pvt. Ltd. reported in [2010] 322 ITR 158 (SC) to hold that merely because a claim has not been accepted would not warrant imposition of penalty. The Tribunal correctly held that while adjudicating a penalty, what is to be examined is the conduct of the assessee in making the claim and not the merits of the claim. In these circumstances, we see no reason to entertain the proposed question of law. 3.Accordingly, the appeal is dismissed with no order as to costs. (M.S. SANKLECHA, J.) (J.P. DEVADHAR, J.)