Commissioner of Income Tax vs Mushashi Autoparts India (P.) Ltd.

C.M. Appeal No. 21107 of 2010

The delay of 90 days in refilling the appeal is condoned for the reasons stated in the application. Application stands disposed of

I.T. A. No. 1866 of 2010

In the return filed by the assessee interest accrued on FDR was not offered for tax. While making that addition, the Assessing Officer also

initiated penalty proceedings by issuing show-cause notice to the assessee and ultimately passed the orders imposing penalty of Rs. 7.50 lakhs

upon the assessee u/s 271(1)(c) of the Act.

The Commissioner of income tax (Appeals) deleted this penalty and the order of the Commissioner of income tax (Appeals) has been affirmed

by the income tax Appellate Tribunal, inter alia, observing as under:

We have considered the facts of the case and the submissions made before us, in the appellate order, the learned Commissioner of income tax

(Appeals) mentioned that the assessee computed pre-operative expenses after deducting interest income of Rs. 20,53,666. This fact was shown in

the balance-sheet filed along with the return of income. However, the Assessing Officer held that interest of Rs. 20,53,666 could not be adjusted

against pre-operative expenses as claimed by the assessee. The claim made by the assessee was based upon a few decisions of the court, but it

was not accepted by the Assessing Officer. That does not mean that there was any non-disclosure of material facts, which could warrant levy of

penalty. The learned Departmental representative could not controvert the aforesaid factual finding of the learned Commissioner of income tax

(Appeals). Thus, the facts are that a claim was made in the account that interest amounting to Rs. 20,53,666 has been taken into consideration for

working out pre-operative expenses of Rs. 7,43,79,256. Accordingly, this income was not shown as liable to be taxed under the residuary head.

The claim was based upon some decisions, which may not have been accepted by the Assessing Officer or the appellate authority. However, that

does not mean that the assessee either concealed income or furnished inaccurate particulars of income. It could also not be said that the assessee

could not substantiate his explanation for the reason that there could be a genuine difference of opinion whether the interest was to be taxed or it

was to be reduced from the cost of asset. Therefore, which requires correction from us.

It is clear from above that there was no concealment on the part of the assessee, and in these circumstances, penalty could not be imposed. No

question of law arises for determination and accordingly this appeal is dismissed.