1.   Tejpal Singh Kohli Vs. CIT, I.T.A. No. 3637/Del/2014, Date of Order: 15.10.2014, ITAT - Delhi

The act of CIT of passing an order u/s 263 of Income-tax Act, 1961 and disallow the deduction claimed by the assessee u/s 80IC, where the same was allowed by CIT(A) in earlier assessment  year, is not justified.

In brief, the assessee has filed his return of income & claimed deduction u/s 80IC of the Income Tax Act, 1961. The AO has passed order u/s 143(3) of the Act and allowed the claim of the assessee. However, the CIT disallowed the same and passed order u/s 263 by raising contention that the assessee is engaged only in assembling the LCD monitors and that the unit of the assessee is not located in the notified area. The assessee contended that disallowance was unwarranted since the very same issue of deduction was allowed by CIT(A) in earlier A.Y. in assessee’s own case.

The Hon’ble ITAT has held that since the deduction u/s 80IC allowed by AIT(A) in earlier year in assessee’s own case after considering the submission of the assessee & facts of the case. Further, reliance is placed on decision of Hon’ble Supreme Court in the case of CIT vs. Max India Ltd..Thus, the order passed by the CIT is bad in law.

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2.  Shri Kirtibhai K. Shroff Vs.  ITO, I.T.A. No.  342/Ahd/2011, Date of Order: 17.10.2014, ITAT - Ahmedabad

Penalty u/s 271(1)(c) of Income Tax Act, 1961 cannot be levied merely because the explanation furnished by the assessee is not acceptable to revenue authority .

In brief, during the course of search some valuables including jewellery were found. The assessee has filed explained regarding the jewellery that some part belongs to his wife and some part thereof was gifted by his mother to his wife. However, the explanation of the assessee was not fully accepted by the AO & a part of jewellery was treated as income from undisclosed source and penalty u/s 271(1)(c) was also levied.

The Hon’ble ITAT has held that merely non-acceptance of explanation filed by the assessee in the absence of any adverse material brought on record, is not a valid ground for levy of penalty u/s 271(1)(c) of the Income Tax Act, 1961. 

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