The Commissioner Of Income Tax v. M/S. Goa Carbon Ltd

IN THE HIGH COURT OF BOMBAY AT GOA TAX APPEAL NO. 26 OF 2010 THE COMMISSIONER OF INCOME TAX Versus M/S. GOA CARBON LTD. ... Appellant... Respondent Mrs. Asha Dessai,Advocate for the Appellant. P.C: We have heard the learned Counsel appearing for the Appellant.2. This appeal is preferred by the appellant under section 260/A ofthe income Tax Act,1961. The appeal arises out of the penaltyproceedings under section 271(1)(c) of the said Act. 3. The respondent/assessee filed return for the assessment year2003-2004. In the return, deduction under section 80HHC of the saidAct was claimed by the respondent/assessee, in respect of CalcinedPetroleum Coke. The Assistant Commissioner of Income Tax in thescrutiny of the return, rejected the claim of deduction under section80HHC. The claim was rejected on the ground that the productcalcined petroleum coke is a mineral oil mentioned in sub-section2(b) of section 80HHC and, therefore, penalty proceedings undersection 271(1)(c) were initiated for furnishing inaccurate particularsof income by making an ineligible claim of deduction under section80HCC. It was alleged that there was a concealment of income. Theappeal arising out of the quantum appeal is pending in this Court. After the claim of deduction under section 80HHC was disallowed,the penalty proceedings were initiated. The Assistant Commissioner of Income Tax held that as the assessee claimed deduction in respect to calcined petroleum coke bycontending that Section 80HHC was applicable, the Assessee hasfurnished "inaccurate particulars of income towards wrong claim ofdeduction and hence concealed its income." Penalty ofRs.24,84,400/- was imposed by the Assistant Commissioner ofIncome-Tax. 4. An appeal was preferred by the respondent/assessee against the said order. The Commissioner of Income Tax (Appeals) held thatpenalty cannot be imposed.. The Commissioner held that the claimfor deduction under section 80HHC was raised by the Assessee undera honest belief that the deduction was available and in fact the saidclaim was made after furnishing all necessary particulars of theincome. An appeal was preferred by the appellant before the IncomeTax Tribunal against the order by which the order imposing penaltywas set aside by the Commissioner. 5. What has been held by the Income Tax Tribunal in the impugned order is that this was a case where allowance was claimed by theAssessee which was not accepted on merits. A finding of fact wasrecorded by the Tribunal that all details of the income werefurnished by the respondent/assessee. The Appellate tribunal heldthat this was not a case where inaccurate particulars were supplied orthat there was concealment of income. It was held that a legalcontention was raised for claiming deduction under section 80 HHCwhich was not accepted by the authorities. Therefore, theCommissioner of Income Tax as well as the Appellate Tribunal heldthat proceeding under section 271(1)(c) was not attracted. 6. We are satisfied that in this case after fully disclosing details ofincome, a legal claim for entitlement of deduction under section 80HHC which has not been accepted. For raising a legal claim afterdisclosing all particulars of income, section 271(1)(c) will not beattracted. 7. In view of the concurrent findings of fact recorded by theCommissioner of Income Tax and the Appellate Tribunal, nosubstantial questions of law arises and the appeal is thereforedismissed. A. S. OKA, J. ap/- F. M. REIS, J.