Case Law Details
Jaypee Cement Corporation Ltd. Vs ACIT (ITAT Delhi)
ITAT Delhi held that imposition of penalty under section 270A of the Income Tax Act unsustainable in absence of any malafide intention on the part of the assessee to claim excess deduction under section 32AC of the Income Tax Act.
Facts- The assessee is engaged in the business of manufacturing and selling cement, manufacturing and selling asbestos sheets, heavy engineering workshops, and foundries. In the return, the assessee claimed deduction u/s 32AC of the Act in the sum of Rs. 225,03,97,246/-which is the gross amount of investment in new plant or machinery as against its claim of 100% deduction u/s 32AC of the Act. The ld AO granted deduction u/s 32AC of the Act only to the extent of 15% of gross amount of investment in new plant and machinery which worked out to Rs. 33,75,59,587/-. For the differential disallowance of deduction u/s 32AC of the Act, the ld AO initiated penalty proceedings u/s 270A of the Act on the ground that the assessee had underreported or misreported its income to the extent of Rs. 191,28,37,659/- (Rs. 2,25,03,97,246 – Rs. 33,75,59,587).
Conclusion- Held that the assessee had come forward voluntarily before the ld AO to withdraw the excess claim of its deduction u/s 32AC of the Act before any detection by the Income Tax Department. Hence, in our considered opinion, the assessee‘s case would squarely fall under the exception provided u/s 270A(6)(a) of the Act wherein, the assessee had given its bona fide explanation and had disclosed all the material facts that are relevant for the explanation offered. In view of the exception provided in section 270A(6)(a) of the Act, we hold that the present facts does not make the revenue eligible to levy penalty u/s 270A of the Act.
Held that in the penalty show cause notice issued u/s 270A read with Section 274 of the Act, the ld AO did not mention the specific charge of offence committed by the assessee i.e. the AO did not mention whether the assessee has either underreported his income or misreported his income or underreported in consequence of misreporting of his income. AO is duty bound to specifically mention the charge of offence committed by the assessee in the show cause notice itself.
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