DCIT 10(2)(2), MUMBAI V. MICROWORLD SOFTWARE SERVICES P.LTD, MUMBAI

ITA 4834/MUM/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0976 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 28-08-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T A KHAN
• Assessee Lawyers: PRASAD BAPAT
• Keywords: Unexplained cash credit; Wrong claim; Difference of opinion; Competent authority
• Section: 143(3)

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI B. R. BASKARAN , AM & SHRI SANDEEP GOSAIN, JM ./ I.T.A. NO . 4834/MUM/2015 , ( / ASSESSMENT YEAR: 2009 - 10 ) D CIT - 10(2 ) (2 ) R. NO. 216 - A , AAYAKAR BHAVAN, M. K. ROAD, MUMBAI - 400020 / VS. MICROWORLD SOFTWARE SERVICES PVT. LTD. PLOT NO. 80. RD NO. 15 MIDC, MAROL ANDHERI(E) , MUMBAI - 400093 ./ ./ PAN/GIR NO. A A CCM1456B ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI T. A. KHAN / RESPONDENTBY : SHRI PRASAD BAPAT / DATE OF HEARING : 21/12 /201 7 / DATE OF PRONOUNCEMENT : 03/01/2018 / O R D E R PER SANDEEP GOSAIN, J UDICIAL MEMBER : THE P RESENT APPE AL FILED BY THE REVENUE IS AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 17 , MUMBAI 2 I.T.A. NO. 4834 /MUM/201 5 MICROWORLD SOFTWARE SERVICES PVT. LTD. DATED 03.06.15 FOR AY 20 09 - 10 ON THE GROUNDS MENTIONED HEREIN BELOW: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE PENALTY U/S.271(I)(C) OF THE ACT WITHOUT APPRECIATING THAT THE ASSESSEE HAD CLAIMED EXCESS DEDUCTION U/S.10A OF THE ACT THOUGH IT IS WELL WI THIN THE KNOWLEDGE OF THE ASSESSEE THAT TH E DEDU CTION U/S.10A IS NOT ALLOWABLE ON THE UNREALIZED EXPORT PROCEEDS AND ON THE EXPENDITURE INCURRED IN FOREIGN CURRENCY AS PER THE PROVISIONS OF SECTION 10A OF THE INCOME - TAX ACT, 1961' 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE PENALTY U/S.271(1)(C) OF THE ACT WITHOUT APPRECIATING THAT THE ASSESSEE HAD FAILED TO REBUT THE PRESUMPTION IN EXPLANATION - 1 OF SECTION 271(1)(C) OF THE ACT.' 3. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE PENALTY U/S.271(1)( C) WITHOUT APPRECIATING THE FACT THAT THE TRAVELLING EXPENDITURE WAS INCURRED IN FOREIGN CURRENCY (WHICH WAS INDIRECTLY RECOVERED BY THE ASSESSEE FROM ITS SUBSIDIARY COMPANY BASED IN USA) WAS NOT DISCLOSED IN THE INFORMATION PROVIDED BY THE ASSESSEE IN ITS RETURN OF INCOME AND THEREFORE, THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF 3 I.T.A. NO. 4834 /MUM/201 5 MICROWORLD SOFTWARE SERVICES PVT. LTD. INCOME AND ALSO CONCEALED THE INCOME, IT OUGHT TO HAVE OFFERED IN THE RETURN FILED BY IT' 4. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE SET A SIDE AND THAT OF THE A.O. BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY 2 . AS PER THE FACTS OF THE PRESENT CASE, ORDER U/S 143(3) WAS PASSED ON 16.09.11 DETERMINING TOTAL INCOME AT RS. 3,93,82,630/ - RESTRICTING THE DEDUCTION U/S 10A UP TO RS. 4,73,44,384/ - AND AO ALSO INITIATED PENALTY PROCEEDINGS BY ISSUE OF NOTICE U/S 274 R.W.S 271(1)(C) OF THE ACT. DURING THE ASSESSMENT PROCEEDING, DISALLOWANCE WERE MADE ON TO ISSUE SUBSEQUENTLY, THE STATUS OF DISALLOWANCE AFTER GIVING EFFECT TO THE CIT(A)S ORDER WAS OF RS. 30,37,567/ - . THE PENALTY PROCEEDINGS WERE INITIATED ON THE SAID AMOUNT AS WAS DULY CONFIRMED BY THE CIT(A)S ORDER. AFTER PROVIDING OPPORTUNITY TO THE ASSESSEE, AO PASSED ORDER OF PENALTY DATED 28.03.14 BY IMPOSING PENALTY OF RS. 10,32,470/ - . 4 I.T.A. NO. 4834 /MUM/201 5 MICROWORLD SOFTWARE SERVICES PVT. LTD. AGGRIEVED BY THE ORDER OF AO, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND LD. CIT(A) AFTER CONSIDERING THE CASE OF BOTH THE PARTIES ALLOWED THE APPEAL OF THE ASSESSEE . NOW BEFORE US, THE R EVENUE HAS PREFERRED THE APPEAL BY RAISING THE ABOVE GROUNDS. GROUND NO. (1 TO 3 ) 3. SINCE ALL THE ABOVE GROUNDS RAISED BY THE ASSESSEE ARE INTER - CONNECTED AND INTER - RELATED AND RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN DELETING THE PENALTY U/S 271(1)(C) OF THE ACT, THEREFORE WE THOUGHT IT FIT TO DISPOSE OF THE SAME THROUGH THE PRESENT COMMON ORDER. 4 . WE HAVE HEARD COUNSELS FOR BOTH THE PARTIES AT LENGTH AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. LD. AR RELIED UPON THE SAME ARGUMENTS AS WERE RAISED BY HIM BEFORE LD. CIT(A) AND THE SAME ARE CONTAINED IN PARA NO. 1.2 OF THE CIT(A)S ORDER AND THE SAME ARE REPRODUCED BELOW: - 5 I.T.A. NO. 4834 /MUM/201 5 MICROWORLD SOFTWARE SERVICES PVT. LTD. 1.2 APPELLANT'S CONTENTIONS AND SUBMISSIONS: 1.2.1 DURING THE APPELLATE PROCEEDINGS, THE LD. AR OF THE APPELLANT SUBMITTED THAT THE AD INITIATED PENALTY ON THE GROUNDS THAT CLAIM OF DEDUCTION U/S. 10A ON UNREALIZED EXPORT SALES PROCEEDS AND CLAIM OF DEDUCTION U/S. 10A ON TRAVELLING EXPE NDITURE INCURRED IN FOREIGN CURRENCY. PENALTY ON BOTH THE ABOVE ISSUES HAS BEEN DELETED BY CIT(A) IN AY 2007 - 08 IN APPELLANT'S OWN CASE. THE APPELLANT HAD MADE A BONAFIDE CLAIM OF DEDUCTION U/S. 10A IN ACCORDANCE WITH THE CA CERTIFICATE - CA CERTIFICATE IN F ORM 56F. THE DECISION OF DELHI HIGH COURT IN THE CASE OF CIT VS. SHRI S. DHANABAL 309 ITR 268 WHEREIN IT WAS HELD THAT BONAFIDE CLAIM MADE RELYING ON CA CERTIFICATE WOULD NOT ATTRACT PENALTY U/S. 271(1)(C). THE APPELLANT IS CLAIMING DEDUCTION U/S. 10A IN A LL THE EARLIER YEARS VIZ. AY 2003 - 04, 2004 - 05 AND 200607 WHICH WERE SELECTED FOR SCRUTINY. IT HAD EXPENDITURE INCURRED IN FOREIGN CURRENCY ON TRAVEL AND SOFTWARE MODULES IN ALL THE YEARS. THE AO HAS NOT MADE ADJUSTMENT TO 'EXPORT TURNOVER' AND 'TOTAL TURNO VER' ELIGIBLE FOR DEDUCTION U/S. LOA ON THIS ISSUE IN ANY OF THE EARLIER YEARS AUDITED FINANCIALS AND ASSESSMENT ORDERS OF AY 2003 - 04, 2004 - 05, 2006 - 07 AND 2007 - 08. A MERE MAKING OF THE CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF WOULD NOT AMOUNT TO F URNISHING INACCURATE PARTICULARS. THE 6 I.T.A. NO. 4834 /MUM/201 5 MICROWORLD SOFTWARE SERVICES PVT. LTD. APPELLANT ALSO RELIED ON THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. 322 ITR 158 (SC). FURTHER, MERE DISALLOWANCE OF CLAIM ON ACCOUNT OF DIFFERENCE OF OPINION WOULD NOT TRI GGER PENALTY U/S. 271(1)(C) OF THE ACT. THE APPELLANT RELIED ON THE DECISION OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. LAKHANI INDIA LTD. 324 ITR 78. 5. BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY LD. CIT(A). THE LD. CIT(A) HAS DEALT WITH THE ABOVE GROUNDS RAISED BY THE REVENUE IN PARA NO. 1.3 OF I TS ORDER. HOWEVER LD. CIT(A) HAD BASED ITS FINDING ON THE EARLIER YEARS ORDER PASSED BY HIM IN ASSESSEES OWN CASE AS THE ISSUE S AROSE IN THE EARLIE R YEAR WERE IDENTICAL. HENCE , IT IS NECESSARY FOR US TO EVALUATE TH E ORDERS PASSED BY LD. CIT(A) FOR EARLIER YEARS. THE OPERATIVE PORTION OF THE ORDER OF LD. CIT (A) IS CONTAINED IN PARA NO. 1.3 OF EARLIE R YEARS ORDER WHICH IS BASIS OF PASSING THE ORDER FOR T HE YEAR UNDER CONSIDERATION AND THE SAME IS REPRODUCED BELOW: - 7 I.T.A. NO. 4834 /MUM/201 5 MICROWORLD SOFTWARE SERVICES PVT. LTD. 1.3 DECISION 1.3.1 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND CONTENTION OF THE LD. AR OF THE APPELLANT AND RECORDS. I FIND THAT SIMILAR ISSUE INVOLVED IN THE APPELLANT CASE IN AY 2007 - 0 8 WHEREIN I HAVE ALLOWED THE APPEAL OF THE APPELLANT BY OBSERVING AS UNDER: - 'I FIND THAT THE LD. AO HAS ON PAGE 2& 3 OF THE APPEAL ORDER REPRODUCED REPLY OF THE APPELLANT, THE LAST FOUR PARAS DID NOT BELONG TO THE CASE OF THE APPELLANT WHEREIN THE LD. AO HAS MENTIONED THAT THE APPELLANT IS A FINANCE AND INVESTMENT CONSULTANT AND WAS ON THE PANEL OF ERSTWHILE GLOBAL TRUST BANK IN EARLIER YEARS WHICH HAS BEEN NOW MERGED WITH ORIENTAL BANK OF COMMERCE. THE ASSESSEE RECEIVED CERTAIN AMOUNT AS ADVANCE FROM GLOB AL TRUST BANK FOR CERTAIN ASSIGNMENTS. THE ASSESSEE HAS ALSO INCURRED VARIOUS EXPENDITURES AGAINST THE ADVANCE AND IN THE MEANWHILE GLOBAL TRUST BANK HAS BECAME DEFUNCT AND MERGED WITH ORIENTAL BANK OF COMMERCE. SINCE THE ENTIRE MANAGEMENT OF ORIENTAL BANK OF COMMERCE WAS NEW AND THE ACCOUNT OF THE ASSESSEE HAS NOT SETTLED, THE ADVANCES GIVEN OF RS. 49,11,740/ - HAS BEEN DEBITED TO THE ASSESSEE. FROM THE ABOVE IT IS CLEAR 8 I.T.A. NO. 4834 /MUM/201 5 MICROWORLD SOFTWARE SERVICES PVT. LTD. THAT INTEREST PAYMENT HAS BEEN ACCOUNTED FOR IN THE BOOKS OF ACCOUNT, THE SAME WAS A CR YSTALISED LIABILITY AND DEBITED BY THE BANK WHICH IS REFLECTED IN THE BANK STATEMENT, SUCH INTEREST PAYMENT IS NOT FOUND TO BE BOGUS OR INTEREST ON UNEXPLAINED CASH CREDIT. THE DISALLOWANCE MADE IS ON THE ISSUE WHEREBY TWO VIEWS ARE POSSIBLE. THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE THE PARTICULARS OF ABOVE INTEREST PAYMENT. THU, TILE ASSESSEE HAS NEITHER SUBMITTED INACCURATE PARTICULARS OF INCOME NOR CONCEALED ANY PARTICULARS OF INCOME, THEREFORE, NO PENALTY IS WARRANTED. 1.3.2 NOW COM ING TO THE MERIT OF THE APPELLANT CASE, IT IS SEEN THAT THE WHILE COMPUTING THE INCOME ELIGIBLE FOR DEDUCTION U/S 10A THE LD. AO DISALLOWED THE TRAVELLING EXPENSES INCURRED IN CONNECTION WITH PROVIDING THE SOFTWARE MODULES TO ITS CLIENTS OR FOR THEIR IMPLE MENTATION. THE RATIONALE BEHIND SUCH DISALLOWANCES WAS THAT COMPANY IS INDIRECTLY RECOVERING ITS FOREIGN TRAVELLING EXPENDITURE IN FOREIGN CURRENCY FROM ITS SUBSIDIARY COMPANY BASED IN USA TO WHOM IT HAS SHOWN EXPORT SALES OF RS. 6,73,18,493/ - . ACCORDINGLY , THE AO HELD THAT THE EXPENSES WHICH ARE INCURRED IN FOREIGN EXCHANGE IS TO BE REDUCED 9 I.T.A. NO. 4834 /MUM/201 5 MICROWORLD SOFTWARE SERVICES PVT. LTD. FROM THE EXPORT TURNOVER AS WELL AS TOTAL TURNOVER OF THE ASSESSEE FOR THE PURPOSE OF COMPUTING THE ELIGIBLE DEDUCTION U/S. 10A OF THE ACT FOR THE YEAR UNDER CONSIDERAT ION. FURTHER, THE AO NOTICED THAT THE EXPORT PROCEEDS HAVE NOT BEEN FULLY RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE WITHIN THE TIME STIPULATED U/S. 10A OF THE ACT I.E. 6 MONTHS FROM THE END OF THE PREVIOUS YEAR. APPELLANT SUBMITTED THAT IN TERMS OF THE UNRE ALIZED EXPORT SALES PROCEEDS TO THE TUNE OF RS. 2,33,52,828/ - THE LETTER OF EXTENSION WAS SUBMITTED TO THE COMPETENT AUTHORITY BY THE CITIBANK, THE APPROVAL FOR WHICH WAS YET TO BE RECEIVED. FURTHER, THE AO EXCLUDED THE UNREALIZED EXPORT PROCEEDS FROM THE EXPORT SALES WHILE COMPUTING THE DEDUCTION U/S. 10A OF THE ACT AND THE TOTAL DEDUCTION U/S. 10A OF THE ACT WAS RESTRICTED TO RS. 1,68,71,202/ - AS AGAINST THE APPELLANT'S CLAIM OF RS. 2,53,59,491/ - . 1.3.3. GOING BY THE BARE FACT OF THE CASE, IT BECOME QUITE APPARENT THAT THE LD. AO MADE DISALLOWANCES WHICH WERE BASED ON THE INFORMATION PROVIDED BY THE APPELLANT IN ITS RETURN OF INCOME. NO WRONG PARTICULARS WERE GIVEN OR SUBMITTED NOT IS THERE ANY CONCEALMENT OF INCOME BY THE APPELLANT WHICH ENTAILS THE LEVY OF PENALTY. THE APPELLANT HAS MADE FULL AND TRUE DISCLOSURE OF 10 I.T.A. NO. 4834 /MUM/201 5 MICROWORLD SOFTWARE SERVICES PVT. LTD. ALL 'FACTS MATERIALS TO THE COMPUTATION OF ITS INCOME IN THE DOCUMENTS ACCOMPANYING THE RETURN OF INCOME. IT IS NOT THE CASE OF THE AO EITHER THAT THE APPELLANT HAS CONCEALED ANY SUCH PARTICULARS FROM THE DEPARTMENT. THE APPELLANT HOWEVER PREFERRED TO CLAIM EXEMPTION UNDER SECTION 10A ON ITS OWN UNDERSTANDING OF LAW. IT IS A QUITE DIFFERENT THING THAT AO HAS NOT CONCURRED WITH THE CLAIM MADE BY THE APPELLANT. BUT EVERY REJECTION OF THE CLAIM MADE BY THE APPELLANT DOES NOT LEAD TO AUTOMATIC IMPOSITION OF PENALTY UNDER S. 271(1)(C). IN ORDER TO ATTRACT THE LEVY OF PENALTY, THERE MUST BE FAILURE ON THE PART OF THE APPELLANT IN MAKING FULL AND TRUE D ISCLOSURE OF THE FACTS MATERIAL TO THE COMPUTATION OF INCOME AND THEN ONLY IT CAN BE SAID THAT HE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THIS IS NOT THE CASE HERE. THIS IS NOT A FIT CASE FOR LEVY OF P ENALTY. IN THE CASE OF AC] R VS. DSL SOFTWARE LTD. (2012) 147 TTJ (DEL) 67, IT WAS HELD THAT IN TERMS OF PROVISIONS OF SEC. 10A(5) AND 80F1FIE(4) DEDUCTION UNDER THESE SECTIONS IS NOT ADMISSIBLE UNLESS ASSESSEE FURNISHES IN THE PRESCRIBED FORM, ALONG WITH THE RETURN OF INCOME, REPORT OF AN ACCOUNTANT, AS DEFINED IN EXPLANATION BELOW SUB - 11 I.T.A. NO. 4834 /MUM/201 5 MICROWORLD SOFTWARE SERVICES PVT. LTD. SECTION (2) OF SECTION 288, CERTIFYING THAT DEDUCTION HAS BEEN CORRECTLY CLAIMED IN ACCORDANCE WITH THE PROVISIONS OF THESE SECTIONS. THE ASSESSEE HAD GIVEN ALL THE PARTICUL ARS OF INCOME AND HAD DISCLOSED ALL FACTS TO THE AO IN RELATION TO CLAIM FOR DEDUCTION U/S 10A & 8OHHE OF THE ACT. HE HAD DISCHARGED THE ONUS CAST ON IT IN TERMS OF EXPLANATION 1 TO SEC. 271(1)(C) OF THE ACT. DISALLOWANCE OF CLAIM FOR DEDUCTIONS U/S 10A & 80HHE IN RELATION TO UNREALISED EXPORTS OR DISALLOWANCE OF AN ESTIMATED AMOUNT, HAVING RECOURSE TO PROVISIONS OF SEC.14A THE ACT CANNOT BE CONSIDERED AS CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS THEREOF, ESPECIALLY WHEN ALL THE RELEVANT PA RTICULARS WERE DISCLOSED BEFORE THE AO. MERE ERRONEOUS CLAIM IN ABSENCE OF ANY CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS IS NO GROUND FOR LEVYING PENALTY, ESPECIALLY WHEN THERE IS NOTHING ON RECORD TO SHOW EXPLANATION OFFERED BY ASSESSEE WAS NOT BONA FIDE OR ANY MATERIAL PARTICULARS WERE CONCEALED OR FURNISHED INACCURATE. THUS IT CAN BE HELD THAT MERE ERRONEOUS CLAIM IS NOT A GROUND FOR LEVYING PENALTY, IN ABSENCE OF ANY CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS, ESPECIALLY WHEN THERE IS NOTHING ON 12 I.T.A. NO. 4834 /MUM/201 5 MICROWORLD SOFTWARE SERVICES PVT. LTD. RECORD TO SHOW THAT EXPLANATION OFFERED BY ASSESSEE WAS NOT BONA FIDE OR ANY MATERIAL PARTICULARS WERE CONCEALED OR FURNISHED INACCURATE. 1.3.4 IN THE CASE OF ACIT VS.JAYA CHAKRAVARTY (2012) 33 CCH 108 DELTRIB, THE HON'BLE TRIBUNAL RELYING ON THE DECISIONS OF CIT VS. ZOOM COMMUNICATION P. LTD. 327 ITR 510, & CIT V. RELIANCE PETROPRODUCTS PVT. LTD. - 322 ITR 158 (S ( - ,/ HELD THAT THE ASSESSEE'S CLAIM WAS BONA FIDE. ADMITTEDLY, THE ASSESSEE HAS FULFILLED ALL THE CONDITIONS FOR ELIGIBILITY OF DEDU CTION U/S BA. SECTION 10A(1) PROVIDES DEDUCTION FOR TEN CONSECUTIVE YEARS INCLUDING THE YEAR IN WHICH THE UNDERTAKING BEGINS TO PRODUCE COMPUTER SOFTWARE. THERE IS NO MENTION IN S BOA THAT THE DEDUCTION WOULD BE PERMITTED ONLY IN RESPECT OF RECEIPT AFTER T HE UNDERTAKING IS APPROVED BY STPI. IT IS ONLY CBDT IN ITS CIRCULAR DATED 6 T JANUARY, 2005 THAT STATED THAT THE DEDUCTION U/S 10A WOULD BE PERMISSIBLE ONLY IN RESPECT OF RECEIPT AFTER THE DATE OF REGISTRATION WITH STPI. THE CLAIM OF THE ASSESSEE OF DEDUCT ION U/S 10A IS DULY BACKED BY THE CERTIFICATE ISSUED BY A QUALIFIED CHARTERED ACCOUNTANT. THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT V. ZOOM COMMUNICATION P. LTD. 13 I.T.A. NO. 4834 /MUM/201 5 MICROWORLD SOFTWARE SERVICES PVT. LTD. WHILE CONSIDERING THE DEDUCTION U/S 35(2AB) HAS HELD THAT THE WEIGHTED DEDUCTION WOULD BE P ERMISSIBLE IN RESPECT OF ENTIRE EXPENDITURE INCURRED BY THE ASSESSEE ONCE THE ASSESSEE'S PROJECT OF RESEARCH AND DEVELOPMENT IS APPROVED L, THE COMPETENT AUTHORITY. IT DID NOT APPROVE THE STAND OF THE REVENUE THAT THE WEIGHTED DEDUCTION WOULD BE PERMISSIBL E ONLY IN RESPECT OF EXPENDITURE INCURRED AFTER THE DATE OF APPROVED BY THE COMPETENT AUTHORITY. THE RATIO OF THE ABOVE DECISION WOULD BE SQUARELY APPLICABLE IN RESPECT OF CLAIM U/S 10A. CONSIDERING THE TOTALITY OF FACTS, ASSESSEE'S CLAIM OF DEDUCTION UNDE R S 10A WAS BONA FIDE AND MERELY BECAUSE THE ASSESSING OFFICER DID NOT ACCEPT THE SAME, IT WOULD NOT AMOUNT TO EITHER CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. ORDER OF LEARNED CIT(A) CANCELLING PENALTY LEVIED U/S 271(1)(C) IS UPHELD. THUS IT BECOME QUITE CLEAR THAT WHERE THE ASSESSEE'S CLAIM FOR DEDUCTION U/S 10A WAS BONA FIDE, MERELY BECAUSE THE ASSESSING OFFICER DID NOT ACCEPT THE SAME, IT WOULD NOT AMOUNT TO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS LEADING TO LE VY OF PENALTY U/S 271(1)(C). 14 I.T.A. NO. 4834 /MUM/201 5 MICROWORLD SOFTWARE SERVICES PVT. LTD. 1.3.5 FURTHER IN THE CASE OF UNI DESIGN JEWELLERY VS. DCIT (2010) 6 ITR (TRIB) 10 (MUMBAI),IT WAS HELD THAT PENALTY UNDER S. 271(1)(C) IS A CIVIL LIABILITY AND THE REVENUE IS NOT REQUIRED TO PROVE WILLFUL CONCEALMENT. HOWEVER, EACH AND EVERY ADDITION MADE IN THE ASSESSMENT CANNOT AUTOMATICALLY LEAD TO LEVY OF PENALTY FOR CONCEALMENT OF INCOME. A CASE FOR IMPOSITION OF PENALTY HAS TO BE EXAMINED IN TERMS OF THE PROVISIONS OF EXPIN. 1 TO S. 271(1)(C). SECONDLY, IT IS A SETTLED LEG AL POSITION THAT PENALTY PROCEEDINGS ARE DIFFERENT FROM ASSESSMENT PROCEEDINGS. THE FINDING GIVEN IN THE ASSESSMENT THOUGH IS A GOOD EVIDENCE BUT THE SAME IS NOT CONCLUSIVE IN PENALTY PROCEEDINGS. THE DIFFERENCE BETWEEN THE CLAIM MADE UNDER S. 10A AND ALLO WED BY THE REVENUE IS ON ACCOUNT OF DIFFERENCE OF OPINION AND THE SAME IS STILL PENDING BEFORE THE AO. IT IS NOT THE CASE OF THE REVENUE THAT THE CLAIM OF DEDUCTION MADE BY THE ASSESSEE IS FOUND TO BE FALSE OR :...NTRUE OR THE ASSESSEE IS NOT ENTITLED TO C LAIM SUCH DEDUCTION. IT IS REPEATEDLY HELD BY THE COURTS THAT WHEN THE FACTS ARE CLEARLY DISCLOSED IN THE RETURN OF INCOME, PENALTY CANNOT BE LEVIED AND MERELY BECAUSE AN AMOUNT IS NOT ALLOWED OR TAXED TO INCOME, IT CANNOT BE SAID THAT THE ASSESSEE HAD FIL ED 15 I.T.A. NO. 4834 /MUM/201 5 MICROWORLD SOFTWARE SERVICES PVT. LTD. INACCURATE PARTICULARS OR CONCEALED ANY INCOME CHARGEABLE TO TAX. FURTHER, CONSCIOUS CONCEALMENT IS NECESSARY. EVEN IF SOME DEDUCTION OR BENEFIT IS CLAIMED BY THE ASSESSEE WRONGLY BUT BONA FIDE AND NO MALA FIDES CAN BE ATTRIBUTED, THE PENALTY WOULD NOT BE LEVIED. WHEREAS IN THE CASE BEFORE US IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAS MADE A FALSE CLAIM OF DEDUCTION UNDER S. 10A. IT IS ALSO NOT THE CASE OF THE REVENUE THAT THE ASSESSEE IS A BOGUS CONCERN OR THE CLAIM OF DEDUCTION UNDER S. 10 A MADE BY THE ASSESSEE WAS FOUND TO BE FALSE OR UN: - UE OR THE ASSESSEE IS NOT ENTITLED TO SUCH DEDUCTION. THERE IS NO CONCEALMENT ON THE PART OF THE ASSESSEE AND THEREFORE, THE PENALTY IMPOSED BY THE AO AND SUSTAINED BY THE CIT(A) IS NOT SUSTAINABLE IN LAW AND ACCORDINGLY THE SAME IS DELETED. FROM A COMBINED READING OF THE LAW ON PENALTY IT IS ABUNDANTLY CLEAR THAT WHERE THERE IS DIFFERENCE BETWEEN THE INCOME RETURNED AND I NCOME ASSESSED AND SUCH DIFFERENCE IS ON ACCOUNT OF DISALLOWANCE OF THE BONA FIDE CLA IM FOR DEDUCTION MADE UNDER S. 10A IT WOULD NOT CONSTITUTE CONCEALMENT AND HENCE PENALTY UNDER S. 271(1)(C) WOULD NOT BE LEVIABLE. THE PENALTY LEVIED BY THE LD. AO IS 16 I.T.A. NO. 4834 /MUM/201 5 MICROWORLD SOFTWARE SERVICES PVT. LTD. ACCORDINGLY DELETED AND THIS GROUND OF APPEAL IS ALLOWED.' THE FACTS REMAINING THE SAME, THE LD. AO HAS NOT BROUGHT OUT ANY FACTS CONTRARY TO WHAT HAS BEEN ON RECORD, THE CASE LAW RELIED UPON BY THE APPELLANT ARE SQUARELY APPLICABLE TO THE FACTS OF THE APPELLANT'S CASE. FOLLOWING THE DECISION OF THE EARLIER YEAR, THE APPEAL OF THE APPELLANT IS ALLOWED. 6. LD. AR ALSO RELIED UPON THE ORDERS PASSED BY COORDINATE BENCH OF HONBLE ITAT IN CASE TITLED DCIT VRS. GENESYS INTERNATIONAL CORPN. LTD. IN ITA NO. 7459/M/11 FOR AY 2007 - 08 WHEREIN THE IDENTICAL QUESTIONS WERE RAISED BEFORE ITAT IN RESPECT OF EXCESS DEDUCTION CLAIMED BY ASSESSEE U/S 10A ON ACCOUNT OF UNREALIZED EXPORT PROCEEDS. IN THE SAID CASE, HONBLE ITAT HAD REACHED TO THE CONCLUSION THAT THE ASSESSEE HAS RENDERED THE ENTIRE INFORMATION TO THE AO WITH REGARD TO UNREALIZED EXPORT PROCEEDS A ND SINCE THE ASSESSEE HAD MADE ADEQUATE DISCLOSURE IN ITS RETURN WITH RESPECT TO UNREALIZED EXPORT PROCEEDS AT THE TIME OF FILING OF ITS ROI, THEREFORE NO FAULT WAS 17 I.T.A. NO. 4834 /MUM/201 5 MICROWORLD SOFTWARE SERVICES PVT. LTD. FOUND IN THE CONDUCT OF THE ASSESSEE AND THUS NO PENALTY WAS FOUND TO BE IMPOSABLE UPON THE ASSESSEE. 7. AS PER THE FACTS OF THE PRESENT CASE, THE ASSESSEE HAD ALSO MADE FULL AND TRUE DISCLOSURES OF ALL FACTS MATERIAL TO THE COMPUTATION OF ITS INCOME IN THE DOCUMENTS ACCOMPANY THE RETURN OF INCOME. THE ASSESSEE HAD MADE BONAFIDE CLAIM OF DEDUCT ION U/S 10A IN ACCORDANCE WITH THE CA CERTIFICATE - CA CERTIFICATE IN FORM 56F AND THEREFORE MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF WOULD NOT AMOUNT TO FURNISH INACCURATE PARTICULARS. APART FROM ABOVE, MERE DISALLOWANCE OF CLAIM O N ACCOUNT OF DIFFERENCE OF OPINION WOULD NOT TRIGGER PENALTY U/S 271(1)(C) OF THE ACT. 8. AFTER HAVING GONE THROUGH THE FACTS OF THE PRESENT CASE AS WELL AS CONSIDERING THE ORDERS PASSED BY REVENUE AUTHORITIES AND SUBMISSIONS MADE BY BOTH THE PARTIES, WE FIND THAT LD. CIT(A) WHILE DECIDING THE ABOVE GROUND S HAS RELIED UPON THE ORDERS PASSED IN ASSESSEES OWN CASE FOR AY 2008 - 09 AND 2007 - 08 AS THE ISSUES WERE BASED ON IDENTICAL FACTS. 18 I.T.A. NO. 4834 /MUM/201 5 MICROWORLD SOFTWARE SERVICES PVT. LTD. 9. N O NEW FACTS OR CONTRARY JUDGMENTS HAVE BEEN BROUGHT ON RECORD BEFORE US I N ORDER TO CONTROVERT OR REBUT THE FINDINGS SO RECORDED BY LD CIT (A) . THEREFORE, THERE ARE NO REASON S FOR US TO INTERFERE INTO OR DEVIATE FROM THE FINDINGS RECORDED BY THE LD. CIT (A). HENCE , WE ARE OF THE CONSIDERED VIEW THAT THE FINDINGS SO RECORDED BY THE LD. CIT (A) ARE JUDICIOUS AND ARE WE LL REASONED. RESULTANTLY, THESE GROUND S RA ISED BY THE REVENUE STANDS DISMISSED . GROUND NO. 4 AND 5 10. THESE GROUNDS ARE GENERAL IN NATURE, THUS REQUIRES NO SPECIFIC ADJUDICATION. 11 . IN THE NET RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD JAN , 201 8 SD/ - SD/ - (B. R. BASKARAN ) (SANDEEP GOSAIN) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 0 3 . 01 .201 8 SR.PS . DHANANJAY 19 I.T.A. NO. 4834 /MUM/201 5 MICROWORLD SOFTWARE SERVICES PVT. LTD. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI