Sutra Systems (India) Pvt. Ltd.,, Pune v. Dy. CIT, Circle-6, Pune, Pune

ITA 1452/PUN/2009 | 2005-2006
Pronouncement Date: 26-07-2011 | Result: Allowed

Appeal Details

RSA Number 145224514 RSA 2009
Assessee PAN AACCS5421N
Bench Pune
Appeal Number ITA 1452/PUN/2009
Duration Of Justice 1 year(s) 7 month(s) 5 day(s)
Appellant Sutra Systems (India) Pvt. Ltd.,, Pune
Respondent Dy. CIT, Circle-6, Pune, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 26-07-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 26-07-2011
Assessment Year 2005-2006
Appeal Filed On 21-12-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI G.S. PANNU ACCOUNTANT MEMBER I.T.A. NO. 1452/PN/09 (ASSTT. YEAR: 2005-06) SUTRA SYSTEMS (INDIA) P. LTD. .. APPELLANT 23 ELECTRONIC ESTATE PUNE-SATARA ROAD PUNE PAN AACCS5421N VS. DY. COMMISSIONER OF INCOME-TAX .. RESPOND ENT CIR.6 PUNE APPELLANT BY: SHRI C.H. NANIWADEKA R RESPONDENT BY: SHRI H.K. LEUWA ORDER PER G.S. PANNU AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-III PUNE DATED 1.10.2009 WHICH IN TURN HAS ARISEN FROM AN ORDER DATED 27.6.2008 PASSED BY THE ASSESSING OFFICER UNDER SECTION 271(1 )(C) OF THE INCOME-TAX ACT 1961 (IN SHORT THE ACT) PERTAINI NG TO THE ASSESSMENT YEAR 2005-06. 2. IN THIS APPEAL PERTAINING TO THE ASSESSMENT YEAR 2005 -06 THE ONLY GRIEVANCE OF THE ASSESSEE IS THAT THE COMMISSIONER OF INCOME -TAX (APPEALS) ERRED ON FACTS AND IN LAW IN UPHOLDING THE PENALTY OF RS 7 72 214/- LEVIED BY THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE ACT. THE RE LEVANT FACTS LEADING TO THE DISPUTE ARE THAT THE ASSESSEE COMPANY IS A 100% EX PORT ORIENTED SOFTWARE DEVELOPMENT COMPANY REGISTERED UNDER SOFTWARE TECHNOLO GY PARK SCHEME AND ENGAGED IN DEVELOPING/DESIGNING COMPUTER SOFTWARE AS PE R CUSTOMERS REQUIREMENT. THE RETURN OF INCOME WAS FILED BY THE A SSESSEE ON 31.10.2005 DECLARING TOTAL INCOME OF RS 4 84 679/- AFTER CLAIMING EXEMPTION OF RS 21 10 308/- UNDER SECTION 10B OF THE ACT. THE ASSESSEE W AS INCORPORATED ON 12.12.1994 AND WAS THEREFORE ELIGIBLE FOR EXEMPTIO N UNDER SECTION 10B FROM THE 2 ASSESSMENT YEARS 1995-96 TO 2004-05. HOWEVER THE ASSESSEE ALSO CLAIMED EXEMPTION UNDER SECTION 10B IN THE YEAR UNDER CONSIDER ATION I.E ASSESSMENT YEAR 2005-06 IN THE RETURN OF INCOME ORIGINALLY FILE D ON 31.10.2005. A SURVEY ACTION UNDER SECTION 133A OF THE ACT WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 21.2.2006 WHEREIN IT WAS NOTICED THAT THE ASSESSEE HAD ATTAINED THE STPI REGISTRATION IN THE YEAR 2001 AND BECAUSE OF IT THE ASSESSEE CONSIDERED THE TEN-YEAR PERIOD OF EXEMPTION U/S 10B OF THE ACT FROM THE ASSESSMENT YEAR 2001-02 ONWARDS. ON BEING CONFRONTED WITH THE CONTENTS OF THE CBDT CIRCULAR NO 1/2005 DATED 6.1.2005 THAT PERIOD O F TEN YEARS IS TO BE RECKONED FROM THE ASSESSMENT YEAR 1995-96 AND ACCORDINGLY BENEFIT UNDER SECTION 10B OF THE ACT WAS AVAILABLE ONLY UPTO THE ASSESS MENT YEAR 2004-05 ASSESSEE FILED A REVISED RETURN FOR THE ASSESSMENT YEAR 200 5-06 ON 13.3.2006 DECLARING AN INCOME OF RS 25 94 990/- THEREBY WITHDRAW ING THE CLAIM OF EXEMPTION UNDER SECTION 10B OF THE ACT. THE ASSESSMENT U/ S 143(3) OF THE ACT WAS FINALIZED AT THE SAID RETURNED INCOME. WHILE FIN ALIZING THE ASSESSMENT UNDER SECTION 143(3) THE ASSESSING OFFICER OBSERVED THAT THE TOT AL INCOME WAS INCREASED BY RS 21 10 308/- IN THE REVISED RETURN OF IN COME AS A RESULT OF SURVEY CARRIED OUT IN THE PREMISES OF THE ASSESSEE UNDER SECTION 13 3A OF THE ACT AND HE ACCORDINGLY INITIATED PENALTY PROCEEDINGS UNDER SECTION 2 71(1)(C) ON THE GROUND THAT ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOM E. 3. IN THE PENALTY PROCEEDINGS IT WAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 10B FOR THE ASSESSMENT YEAR 2005-06 UNDER A MISTAKEN BELIEF AND INTERPRETATION TH AT THE PERIOD OF TEN YEARS WAS TO BE CALCULATED FROM THE DATE FROM WHICH THE UNIT WAS GRANTED STPI REGISTRATION AND CUSTOM BONDING I.E. W.E.F. 22.4.1999 AND NOT FROM THE DATE OF SETTING-UP. THAT ON BEING CONFRONTED WITH THE CBDT CI RCULAR DATED 6.1.2005 (SUPRA) ASSESSEE IMMEDIATELY ACCEPTED THE POSITION OF LAW AND FILED A REVISED RETURN WITHDRAWING THE CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT. THE ASSESSEE CONTENDED THAT IT ALWAYS CO-OPERATED WITH THE INCO ME-TAX DEPARTMENT 3 AND THE MISTAKE OF CLAIMING THE IMPUGNED DEDUCTION UND ER SECTION 10B IN THE ASSESSMENT YEAR 2005-06 WAS ON ACCOUNT OF ASSESSEES OWN INTER PRETATION OF LAW AND THEREFORE THE MISTAKE WAS INADVERTENT WITHO UT ANY MALA FIDE INTENTIONS. FURTHER THE FACT THAT THE INCOME-TAX DEPARTMENT HAD T O COME OUT WITH NOTIFICATION DATED 6.1.2005 (SUPRA) CLARIFYING THE POSITION OF LAW ITSELF INDICATED THAT THERE WAS SOME CONFUSION IN THE MINDS OF THE TAXPAYERS/ASSESSEES AS TO THE INTERPRETATION OF THIS PARTICULAR PROVISION OF LAW AND THEREFORE IT W AS URGED THAT THERE WAS NO DELIBERATE OR WILLFUL ATTEMPT ON THE PART OF THE ASSE SSEE TO EVADE THE TAX OR DEFRAUD THE REVENUE AND THEREFORE ASSESSEE SHOULD N OT BE VISITED WITH PENALTY FOR CONCEALMENT UNDER SECTION 271(1)(C) OF THE ACT. 4. THE ABOVE SUBMISSIONS OF THE ASSESSEE DID NOT FIND FAVO UR WITH THE ASSESSING OFFICER WHO IMPOSED A PENALTY OF RS 7 72 214/- BEING 100% OF THE TAX SOUGHT TO BE EVADED WITH RESPECT TO THE CLAIM OF EXEMPT ION UNDER SECTION 10B OF THE ACT. IN THE OPINION OF THE ASSESSING OFFICER ON BEI NG CONFRONTED WITH THE CORRECT POSITION OF LAW DURING THE COURSE OF SURVEY THE ASSESSEE HAD NO CHOICE BUT TO WITHDRAW THE CLAIM UNDER SECTION 10B AND THERE FORE IT COULD NOT BE SAID THAT THE REVISED RETURN WAS FILED BY THE ASSESSEE VOLUNT ARILY. ACCORDING TO THE ASSESSING OFFICER HAD THE CASE NOT BEEN TAKEN UP FOR SCRUTI NY OR SURVEY NOT CONDUCTED IN THIS CASE ASSESSEE WOULD NOT HAVE FILED THE R EVISED RETURN. AGAINST THE ORDER OF THE ASSESSING OFFICER ASSESSEE WENT IN APPEA L BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS). 5. THE COMMISSIONER OF INCOME-TAX (APPEALS) AFTER CONSID ERING THE SUBMISSIONS OF THE ASSESSEE CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFICER BY OBSERVING AS FOLLOWS: 5. DURING APPELLATE PROCEEDINGS THE APPELLANT REI TERATED WHAT IT SUBMITTED BEFORE THE AO DURING PENALTY PROCEEDINGS. AFTER DUE CONSID ERATION OF THE SUBMISSION OF THE APPELLANT IN THE LIGHT OF THE FACTS OF THE CASE I FIND IT TO BE DEVOID OF ANY MERIT. THE AO HAS ELABORATELY DEALT WITH THE POINT RAISED BY THE ASSESSEE COMPANY AGAINST LEVY OF PENALTY UNDER SECTION 271(1)(C) AND I FIND MYSELF I N AGREEMENT WITH THE VIEW OF THE AO. THE FACT THAT THE INCOME OF RS 21 10 308 HAS BEEN O FFERED BY THE ASSESSEE BY WAY OF REVISED RETURN ONLY AFTER BEING POINTED OUT BY THE DEPARTMENT DURING THE COURSE OF SURVEY OPERATION IS SUFFICIENT TO ESTABLISH THAT THE REVIS ED RETURN HAS NOT BEEN FILED BY THE APPELLANT SUO MOTO OR THE INCOME OF RS 21 10 308 HA S NOT BEEN OFFERED TO TAX VOLUNTARILY. THE APPELLANTS ARGUMENT THAT THE MISTAKE AROSE ON ACCOUNT OF ITS OWN INTERPRETATION OF LAW AND WAS THEREFORE INADVERTENT AND WITHOUT ANY MALA FIDE INTENTION ALSO DOES NOT APPEAR TO HAVE ANY FORCE. THE CIRCULAR NO 1/2005 DA TED 6.1.2005 HAD CLEARLY SPELT OUT 4 THAT THE PERIOD OF TEN YEARS WAS TO BE COUNTED FROM THE YEAR IN WHICH THE ASSESSEE HAS STARTED THE MANUFACTURING OR PRODUCTION OF COMPUTER SOFTWARE. THE ORIGINAL RETURN CLAIMING DEDUCTION U/S 10B WAS FILED BY THE ASSESSE E ON 31.10.2005. AS THE CIRCULAR NO.1/2005 WAS VERY MUCH IN EXISTENCE AT THE TIME OF FILING OF RETURN OF INCOME THE ASSESSEE CANNOT TAKE THE PLEA THAT THE MISTAKE AROS E ON ACCOUNT OF ITS OWN INTERPRETATION OF LAW. WITH THE ISSUANCE OF CIRCULAR NO. 1/2005 DA TED 6.1.2005 THERE REMAINED NOTHING TO BE INTERPRETED WITH REGARD TO THE COUNTING OF THE P ERIOD OF TEN YEARS. THE FACTS OF THE CASE CLEARLY ESTABLISH THAT THE ASSESSEE HAS FURNISHED I NACCURATE PARTICULARS OF INCOME BY WRONGLY CLAIMING THE DEDUCTION UNDER SECTION 10B AN D THEREFORE HAS RIGHTLY BEEN VISITED WITH THE PENALTY PROVISIONS OF SECTION 271(1)(C) OF THE I.T. ACT. I THEREFORE HOLD THAT THE ACTION OF THE AO IN LEVYING PENALTY U/S 271(1)(C) I N AN AMOUNT OF RS 7 72 214 CALL FOR NO INTERFERENCE AND ACCORDINGLY ORDER U/S 271(1)(C) I S CONFIRMED. BEING AGGRIEVED WITH THE DECISION OF THE COMMISSIONER O F INCOME-TAX (APPEALS) ASSESSEE IS IN FURTHER APPEAL BEFORE US. 6. BEFORE US THE LEARNED COUNSEL FOR THE APPELLANT HAS VEHEMENTLY ARGUED THAT THE WRONG CLAIM OF EXEMPTION CLAIMED U/S 10B IN T HE ORIGINAL RETURN OF INCOME WAS A BONA FIDE MISTAKE. IT IS POINTED OUT THAT SU CH BONA FIDE MISTAKE WAS RECTIFIED BY FILING A REVISED RETURN AND THE SUBSEQU ENT ASSESSMENT HAS BEEN COMPLETED ON THE BASIS OF THE REVISED RETURN AND THE RE VISED INCOME HAS BEEN ACCEPTED. THEREFORE THE ASSESSEE HAD NO INTENTION TO C ONCEAL OR FURNISH INACCURATE PARTICULARS OF INCOME IN THE RETURN ORIGINALL Y FILED. ACCORDING TO HIM IT IS A CASE WHERE THE ASSESSEE MADE A MISTAKE IN THE ORIGINAL RETURN WHICH WAS BROUGHT TO THE NOTICE OF THE ASSESSEE IN THE COURSE OF TH E SURVEY ACTION UNDER SECTION 133A OF THE ACT CARRIED OUT ON 21.2.2006 AND TH EREAFTER THE WRONG CLAIM OF EXEMPTION U/S 10B WAS IMMEDIATELY REVISED. IN THI S CONNECTION IT HAS ALSO BEEN POINTED OUT THAT EVEN DURING THE RECORDING OF STATEMENT OF SHRI R R PETHE THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE DURING T HE COURSE OF SURVEY THE APPELLANT COMPANY HAD CLARIFIED THAT INADVERTENT CLAI M OF EXEMPTION U/S 10B MADE IN THE INSTANT ASSESSMENT YEAR WAS UNDER A GENUINE I MPRESSION THAT THE TEN YEAR EXEMPTION PERIOD WAS TO BE RECKONED FROM TH E YEAR IN WHICH THE ASSESSEE WAS REGISTERED AS AN STPI UNIT AND NOT FROM THE P ERIOD OF SETTING UP OF THE UNIT. THE LEARNED COUNSEL POINTED OUT THAT BEFO RE COMPLETION OF THE ASSESSMENT THE MISTAKE WAS RECTIFIED AND IN FACT IT IS A CASE WHERE THERE IS NO DIFFERENCE BETWEEN THE INCOME RETURNED IN THE REVISED RETURN AND THAT FINALLY ASSESSED. THEREFORE IT IS NOT A CASE OF CONCEALMENT OR F URNISHING OF INACCURATE 5 PARTICULARS OF INCOME IN TERMS OF SECTION 271(1)(C) IN T HE COURSE OF HIS SUBMISSIONS THE LEARNED COUNSEL HAS RELIED UPON THE FOLL OWING DECISIONS: (I) CIT V. RELIANCE PETROPRODUCTS P. LTD. 322 ITR 158 (SC); (II) SHELAT FAMILY TRUST PUNE V. ADDL. CIT IN ITA NO 1482 & 1483/PN/09 ORDER DATED 20.04.2011; AND (III) NITON VALVE INDUSTRIES (P) LTD V. ACIT 30 SOT 236 (MUM.) 7. IT HAS ALSO BEEN POINTED OUT THAT THE REVISED RETU RN ON THE BASIS OF WHICH THE ASSESSMENT HAS BEEN FINALIZED WAS FILED WITHIN THE P ERIOD PRESCRIBED UNDER SECTION 139(5) OF THE ACT WHICH ALSO DEMONSTRATES THE BONA FIDES OF THE ASSESSEE IN CO-OPERATING WITH THE DEPARTMENT IN THE DETERMINA TION OF THE CORRECT TAX LIABILITY. 8. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPR ESENTATIVE APPEARING FOR REVENUE HAS DEFENDED THE ORDERS OF THE AUTHORITI ES IMPOSING PENALTY UNDER SECTION 271(1)(C) OF THE ACT BY POINTING OUT THAT THE CL AIM UNDER SECTION 10B WAS ERRONEOUSLY MADE IN THE RETURN ORIGINALLY FILED AND SUCH ERROR WAS RECTIFIED IN THE REVISED RETURN PRIMARILY BECAUSE OF THE SURVEY ACTION CA RRIED OUT ON 21.2.2006. THEREFORE THE FILING OF THE REVISED RETURN WAS NOT V OLUNTARY BUT WAS AS A RESULT OF THE SURVEY ACTION AND THUS THIS IS A CASE WHERE THE WRON G CLAIM OF EXEMPTION UNDER SECTION 10B WAS DETECTED BY THE DEPARTMENT PRIOR TO ITS RECTIFICATION BY THE ASSESSEE. IN THIS VIEW OF THE MATTER ACCORDING TO THE LE ARNED DEPARTMENTAL REPRESENTATIVE THIS IS A FIT CASE FOR LEVY OF PENALTY UN DER SECTION 271(1)(C) OF THE ACT. IN THE COURSE OF HIS SUBMISSIONS THE LD DR HAS RELI ED UPON FOLLOWING DECISIONS: (I) SUNADA RAM DEKA V. CIT 210 ITR 988(GAU ); (II)CIT V. VIDYAGAURI NATVERLAL & ORS. 238 ITR 91 ( GUJ.) 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. SEC TION 271(1)(C) OF THE ACT PROVIDES FOR LEVY OF PENALTY IN CASES WHERE AN A SSESSING OFFICER FINDS CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. IN OTHER WORDS THE PRE-REQUISITES FOR THE LEVY OF PENAL TY ARE THAT THERE HAS TO BE A CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTI CULARS OF SUCH INCOME. IN 6 THE PRESENT CASE AS PER THE ASSESSING OFFICER THE ASSESSEE HAS CONCEALED THE INCOME AND FURNISHED INACCURATE PARTICULARS THEREOF INA SMUCH AS DEDUCTION OF RS 21 10 308/- UNDER SECTION 10B WAS WRONGLY CLAIMED IN THE RETURN OF INCOME ORIGINALLY FILED ON 21.10.2005. THE CLAIM OF THE ASSE SSEE ON THE OTHER HAND IS THAT THERE IS NO CONCEALMENT OF INCOME OR INACCURATE FUR NISHING OF SUCH INCOME INASMUCH AS THE REVISED RETURN OF INCOME FILED ON 13.3. 2006 CONTAINED AN INCOME OF RS 25 94 990/- AND SUCH INCOME HAS BEEN ASSESSED AS SUCH IN THE ASSESSMENT FINALIZED UNDER SECTION 143(3) OF THE ACT. NOTA BLY THE PLEA ADVANCED IS THAT THOUGH IN THE ORIGINAL RETURN OF INCOME THE CLAIM UNDER SECTION 10B WAS WRONGLY MADE THE ASSESSEE CAME FORWARD TO DISCLOSE THE CO RRECT CLAIM IN THE REVISED RETURN FILED WHICH WAS SUBJECTED TO ASSESSMENT THE REAFTER. ADMITTEDLY THE REVISED RETURN FILED BY THE ASSESSEE DID NOT CONTAIN THE CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT AMOUNTING TO RS 21 10 308 /- AND FURTHER THE REVISED INCOME RETURNED BY THE ASSESSEE AND THE FINALLY ASSESSED IN COME IS ONE AND THE SAME. THE AFORESAID FACTUAL MATRIX IS NOT IN DISPUTE. 10. FACTUALLY IT IS EVIDENT THAT IN SO FAR AS THE REV ISED RETURN IS CONCERNED THERE IS NO DEFAULT OF A CONCEALMENT OR FURNISHING OF I NACCURATE PARTICULARS ON THE PART OF THE ASSESSEE WITH REGARD TO THE CLAIM OF DEDUCTIO N UNDER SECTION 10B OF THE ACT. IN OTHER WORDS THERE IS NO INACCURACY OF INCO ME SO FAR AS THE RETURN REVISED ON 13.3.2006 IS CONCERNED. PERTINENTLY THE ASSE SSMENT PROCEEDINGS CULMINATING IN THE ASSESSMENT FINALIZED UNDER SECTION 14 3(3) OF THE ACT ON 26.12.2007 WERE INITIATED BY ISSUANCE OF A NOTICE UNDER SECTION143(2) OF THE ACT ON 6.10.2006 WHICH WAS SERVED THE ASSESSEE ON 11.10.2006 AS IS EVIDENCED FROM THE DISCUSSION IN THE ASSESSMENT ORDER DATED 26.12.20 07. IT IS OBVIOUS THAT THE ASSESSEE RE-WORKED AND REVISED ITS CLAIM UNDER SECTION 1 0B OF THE ACT MUCH PRIOR TO THE RETURN BEING PICKED UP FOR SCRUTINY ASSESSMEN T. UNDER THESE CIRCUMSTANCES CAN IT BE SAID THAT ASSESSEE HAD CONCEALED OR FU RNISHED INACCURATE PARTICULARS OF INCOME WITH REGARD TO THE WIT HDRAWAL OF CLAIM OF EXEMPTION UNDER SECTION 10B MADE IN THE REVISED RETURN . OF-COURSE IT IS TRUE THAT 7 THE SAID CLAIM WAS WRONGLY MADE BY THE ASSESSEE WHILE FILI NG THE ORIGINAL RETURN OF INCOME ON 31.10.2005. AS PER THE DECISION OF OUR CO-O RDINATE BENCH IN THE CASE OF SHELAT FAMILY TRUST (SUPRA) IN THE PENALTY PRO CEEDINGS UNDER SECTION 271(1)(C) THE BASIS FOR LEVY OF PENALTY SHOULD BE THE D ISCLOSURES MADE BY THE ASSESSEE IN THE RETURN FILED. IN THE CASE BEFORE THE CO- ORDINATE BENCH THE ASSESSEE HAD ORIGINALLY RETURNED WRONG COMPUTATION OF CA PITAL GAINS WHICH WAS SUBSEQUENTLY CORRECTED IN THE RETURN FILED IN RESPONSE T O A NOTICE ISSUED UNDER SECTION 148 OF THE ACT AND THE INCOME WAS ASSESSED AS RETURN ED IN THE RETURN SUBSEQUENTLY FILED. IN THIS BACKGROUND IT WAS OBSERVED TH AT THE BASIS OF THE PENALTY SHOULD BE THE DISCLOSURES MADE BY THE ASSESSEE IN TH E RETURN FILED UNDER SECTION 148 OF THE ACT AND SO LONG AS THE RETURN WAS ACCUR ATE AND DEVOID OF ANY LAPSES THERE CAN BE NO CONCEALMENT OF INCOME. IN COMING TO SUCH CONCLUSION THE CO-ORDINATE BENCH HAS REFERRED TO THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROCHEMICALS LTD. (SUPRA). IN THIS REGARD FOLLOWING OBSERVATIONS OF THE HONBLE SUPREME COURT A RE WORTHY OF NOTICE: THEREFORE IT IS OBVIOUS THAT IT MUST BE SHOWN THA T THE CONDITIONS UNDER SECTION 271(1)(C) MUST EXIST BEFORE THE PENALTY IS IMPOSED. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BECAUSE THAT IS THE ON LY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PA RTICULARS ARE FOUND TO BE INACCURATE THE LIABILITY WOULD ARISE.. 11. IN THIS CASE THE REVISED RETURN FILED ON 13.3.2006 HAS NO DOUBT BEEN FILED WITHIN THE PERIOD PRESCRIBED UNDER SECTION 139(5) OF T HE ACT AND IN FACT IN THE ASSESSMENT FINALIZED THEREAFTER UNDER SECTION 143(3) OF T HE ACT ON 26.12.2007 THE SAME HAS BEEN MADE THE BASIS FOR MAKING THE ASSESSMENT . THUS THE REVISED RETURN OF INCOME FILED ON 13.3.2006 UNDER SECT ION 139(5) WHICH IS THE BASIS FOR THE FINALIZATION OF ASSESSMENT IS THE STARTING POINT TO EXAMINE THE CORRECTNESS OR INCORRECTNESS OF THE PARTICULARS/INCOMES RETURNE D AS PER THE RATIO OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROPRODUCTS P. LTD. (SUPRA). WE SAY SO FOR THE REASON THAT AS PER THE HONBLE SUPREME COURT THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH TH E PARTICULARS OF HIS INCOME . THEREFORE IN THE LIGHT OF THE AFORESAID POSITION IN THE 8 FACTS OF THE PRESENT CASE WHERE THE ASSESSEE IS FOUND TO H AVE FURNISHED A VALID REVISED RETURN UNDER SECTION 139(5) AND INCOME IN SUCH R ETURN HAS BEEN ACCEPTED BY THE ASSESSING OFFICER THERE CANNOT BE A CASE OF CONCEALMENT OF INCOME OR INACCURATE FURNISHING OF PARTICULARS OF SUCH IN COME MERELY BECAUSE IN THE RETURN OF INCOME ORIGINALLY FILED THERE EXISTED A WRONG CLAIM. 12. AT THIS STAGE WE MAY ALSO CONSIDER THE PLEA SET-UP B Y THE REVENUE THAT IN THIS CASE A WRONG CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT WAS MADE BY THE ASSESSEE IN THE RETURN OF INCOME ORIGINALLY FILED ON 31.10.2005 AND THE SAME WAS ADMITTED BY THE ASSESSEE AS A CONSEQUENCE OF THE SURVEY ACTION UNDER SECTION 133A OF THE ACT CARRIED OUT AT THE BUSINESS PREM ISES OF THE ASSESSEE ON 21.2.2006. AS PER THE REVENUE REVISED RETURN FILED O N 13.3.2006 WAS AFTER THE DISCOVERY OF A WRONG CLAIM OF DEDUCTION UNDER SECTION 10B NOTICED DURING THE COURSE OF SURVEY ON 21.2.2006. FACTUALLY SPEAKING IT IS CORRECT THAT DURING THE COURSE OF SURVEY ON 21.2.2006 THE CLAIM OF THE ASSESSEE WA S FOUND TO BE WRONG. THE MOOT POINT TO BE CONSIDERED IS AS TO WHETHER THE CL AIM WAS UNDER BONA FIDE CONSIDERATIONS OR NOT. IN THIS CONNECTION IT MAY BE NOT ED THAT THE DISPUTE REVOLVES AROUND THE CLAIM OF DEDUCTION UNDER SECTION 10 B WHICH PROVIDES FOR HUNDRED PERCENT DEDUCTION OF PROFITS DERIVED BY A HUN DRED PERCENT EXPORT ORIENTED UNDERTAKING FROM EXPORT OF ARTICLE OR THING OR COMPUTER SOFTWARE MANUFACTURED OR PRODUCED BY IT. THE DEDUCTION IS AVAI LABLE FOR A PERIOD OF TEN CONSECUTIVE ASSESSMENT YEARS BEGINNING WITH THE ASSESSMENT Y EAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UNDERTAKING BEGINS TO MA NUFACTURE OR PRODUCE ARTICLES OR THINGS OR COMPUTER SOFTWARE. THE HUNDRED PER CENT EXPORT ORIENTED UNDERTAKING HAS BEEN DEFINED IN SECTION 10B TO MEAN AN UNDERTAKING APPROVED BY THE BOARD APPOINTED IN THIS BEHALF BY THE CENTRAL GOVERNMENT IN EXERCISE OF THE POWERS CONFERRED BY SECTION 14 OF THE INDUSTRIES (DE VELOPMENT & REGULATION) ACT 1951 AND THE RULES MADE THEREUNDER. IN THIS CASE THE ASSESSEE STARTED ITS EXPORT UNDERTAKING IN THE YEAR 1994-95 AND THE SAME W AS SUBSEQUENTLY APPROVED AS A HUNDRED PERCENT EOU BY THE BOARD APPOI NTED BY THE CENTRAL 9 GOVERNMENT IN EXERCISE OF THE POWERS CONFERRED UNDER SECT ION 14 OF THE INDUSTRIES (DEVELOPMENT & REGULATION) ACT IN THE YEAR 2001. IN CALCULATING THE TEN-YEAR PERIOD OF DEDUCTION THE ASSESSEE COUNTED FROM T HE YEAR OF RECEIVING APPROVAL AS A HUNDRED PERCENT EOU WHEREAS IT WAS REQUI RED TO CALCULATE THE SAME FROM THE ASSESSMENT YEAR IN WHICH IT STARTED MANUFA CTURING OR PRODUCING THE COMPUTER SOFTWARE WHICH WAS CORRESPONDING TO THE YEAR OF ITS SETTING UP I.E. 1994-95. UNDER THIS WRONG INTERPRETATION THE ASSESSEE CL AIMED DEDUCTION UNDER SECTION 10B EVEN FOR THE ASSESSMENT YEAR 2005-06 I.E. T HE YEAR UNDER CONSIDERATION WHEREAS THE FINAL YEAR OF CLAIM WAS UPTO THE ASSESSMENT YEAR 2004-05. THE CLAIM OF THE ASSESSEE IS THAT IT WAS AN INAD VERTENT WRONG INTERPRETATION OF A LEGAL PROVISION AND NOT A MISTAKE WITH MALA FIDE INTENTION. IN THIS CONNECTION WE HAVE PERUSED THE CIRCULAR NO. 1 OF 2 005 DATED 6.1.2005 ISSUED BY THE CBDT WHEREIN CERTAIN CLARIFICATIONS HAVE BE EN ISSUED. REPRESENTATIONS WERE RECEIVED BY THE CBDT AS TO WHETHER AN UNDERTAKING SET UP IN DOMESTIC TARIFF AREA AND WHICH WAS SUBSEQUENTLY APPROV ED AS A HUNDRED PERCENT EOU IN TERMS OF SECTION 10B WAS ELIGIBLE FOR D EDUCTION UNDER SECTION 10B OF THE ACT. CLARIFYING THE POSITION THE BOARD EX PLAINED THAT SUCH UNITS WERE ELIGIBLE FOR DEDUCTION UNDER SECTION 10B ON GETTING AP PROVAL AS HUNDRED PERCENT EOU BUT ONLY FROM THE YEAR IN WHICH IT GOT APPROVAL AND THAT SUCH DEDUCTION SHALL BE AVAILABLE ONLY FOR THE REMAINING PERIOD OF TEN CONSECUTIVE ASSESSMENT YEARS BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO TH E ASSESSMENT YEAR IN WHICH THE UNDERTAKING BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS OF SOFTWARE AS A DOMESTIC TARIFF AREA UNIT. IN OUR CONSIDER ED OPINION THE AFORESAID CLARIFICATION COVERS THE ASSESSEE IN TERMS OF WHICH ITS CLAIM FOR DEDUCTION UNDER SECTION 10B OF THE ACT FOR THE ASSESSMENT YEAR 2005-06 I S CONTRARY TO THE POSITION OF LAW AND THE SAME HAS BEEN CORRECTLY WITHDRA WN BY THE ASSESSEE IN THE REVISED RETURN FILED ON 31.3.2006. HOWEVER WE AR E PRESENTLY CONCERNED WITH EXAMINING AS TO WHETHER ANY CONCEALMENT OR FURNISHING OF INACCURATE PARTICULARS CAN BE ATTRIBUTED TO THE ASSESSEE FOR HAVING ORIGINALLY CLAIMED THE DEDUCTION. IN 10 OUR VIEW THE FACT THAT THE CBDT CAME UP WITH CLARIFICAT ION ON CERTAIN REPRESENTATIONS RECEIVED BY IT BRINGS OUT THE AMBIGUIT Y ON THE ASPECT IN DISPUTE. THE ASSESSEE HAVING TAKEN ONE COURSE WHICH IS ULTIMATELY FOU ND TO BE UNSUSTAINABLE IN LAW WOULD NOT IPSO FACTO LEAD TO A CONCLUSION THAT IT WAS DONE MALA FIDE OR IT WAS DONE WITH AN INTENT OF CONCEALMENT OR FURN ISHING OF INACCURATE PARTICULARS OF INCOME WITHIN THE MEANING OF SECTION 271 (1)(C) OF THE ACT. IN THIS CASE PERTINENTLY IT HAS ALSO TO BE KEPT IN MIND THAT EV EN BEFORE THE INITIATION OF SCRUTINY ASSESSMENT PROCEEDINGS THE ASSESSEE FILED A REVISED R ETURN WITHDRAWING THE CLAIM OF DEDUCTION RECTIFYING ITS WRONG CLAIM OF DED UCTION AND ASSESSMENT PROCEEDINGS HAVE ALSO BEEN BASED ON SUCH REVISED RETURN A ND THE INCOME RETURNED THEREIN HAS BEEN ACCEPTED. CONSIDERING THE TOT ALITY OF CIRCUMSTANCES IN OUR VIEW IT IS WRONG ON THE PART OF THE REVENUE TO SAY THAT THE ASSESSEE HAS CONCEALED OR FURNISHED INACCURATE PARTICULARS OF INCOME IN THIS CASE WITHIN THE MEANING OF SECTION 271(1)(C) OF THE ACT. THUS WE HERE BY SET ASIDE THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) AND DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF T HE ACT. 13. IN THE RESULT THE APPEAL OF ASSESSEE IS ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON THIS 26 TH DAY OF JULY 2011. SD/- SD/- (SHAILENFRA KUMAR YADAV) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER PUNE: DATED: 26 TH JULY 2011 B COPY OF THE ORDER IS FORWARDED TO : 1. ASSESSEE 2. DCIT CIR. 6 PUNE 3. THE CIT(A)-III PUNE 4. THE CITIII PUNE 5. THE D.R B BENCH PUNE 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT PUNE BENCHES PUNE 11