COMMISSIONER OF INCOME TAX Vs. BACKBONE ENTERPRISES

JUDGEMENT

(1.) In this appeal under Section 260A of the Income-tax Act, 1961 ('the Act'), Appellant -revenue has proposed the following three questions:

(2.) The Respondent - Assessee filed its return of income on 24-10-2001 claiming deduction under Section 80-IA of the Act. The Assessing Officer noticed that the Assessee was a firm and that under the provisions of the Act, only companies registered in India were entitled to deduction under Section 80-IA. He, therefore, issued notice under Section 154 of the Act on 14-3-2002 calling upon the Assessee to show cause as to why deduction claimed under Section 80-IA should not be disallowed. In reply to the said notice, the Assessee vide letter dated 18-3-2002 informed the Assessing Officer that it had already filed a revised return of income under Section 139(5) on 15-3-2002 wherein no claim under Section 80-IA had been made. The Assessing Officer did not consider the Assessee's claim under the revised return and framed assessment determining total income at Rs. 69,74,621 as against the returned income of Rs. 18,96,110. In penalty proceedings, the Assessing Officer observed that the claim for deduction under Section 80-IA was prima facie a wrong claim and that the said wrong claim was brought to the notice of the Assessee by the Assessing Officer vide notice dated 14-3-2002 under Section 154; and that it was in response to the said notice that the Assessee had filed revised return of income withdrawing the claim under Section 80-IA. According to the Assessing Officer since the Assessee had made a wrong claim under Section 80-IA of the Act, it could not escape from penalty proceedings under Section 271 (1)(c) of the Act for concealment of income and furnishing inaccurate particulars of its income by filing revised return. He accordingly, imposed penalty on the total concealed income of Rs. 66,33,439 at a minimum at the rate of 100 per cent of the tax sought to be evaded which came to Rs. 25,21,908.

(3.) The Assessee carried the matter in Appeal before Commissioner (Appeals), who set aside the penalty. Revenue carried the matter in appeal before the Tribunal which came to be dismissed.