Kavitha Rajagopal ORDER
B.R. Baskaran, Member (A)
1. The assessee has filed this appeal challenging the order dated 30.11.2022 passed by the Learned Commissioner of Income Tax (Appeals), (NFAC), Delhi (in short 'Ld. CIT(A)') and it relates to Assessment Year 2011-12. The assessee is aggrieved by the decision of Ld. CIT(A) in confirming the penalty of Rs.38,40,000/- levied by the Assessing Officer under Section 271(1)(c) of the Income Tax Act, 1961 (in short 'the Act').
2. We heard the parties and perused the record. The assessee has raised grounds on legal issues and also on merits. We prefer to adjudicate the grounds urged on merits. The assessee is engaged in business of developing online and offline games softwares in its 100% export oriented STPI unit. The assessment of the year under consideration was completed by the Assessing Officer under Section 143(3) of the Act on 31.12.2013, wherein he made following three additions :-
The Assessing Officer initiated penalty proceedings under Section 271(1)(c) of the Act for furnishing of inaccurate particulars of income in respect of above said three additions. After hearing the assessee, the Assessing Officer levied a penalty of Rs.38,40,000/- under Section 271(1)(c) of the Act. Since the assessee did not appear before the Ld. CIT(A), he confirmed the penalty levied by the Assessing Officer.
3. We noticed earlier that the Assessing Officer has levied penalty on three disallowance made by him. First disallowance relates to rejection of deduction claimed under Section 10A of the Act amounting to Rs.53.17 lacs. A perusal of the penalty order would show that the disallowance of claim made under Section 10A of the Act has been made on account of non-filing of mandatory Audit Report in Form 56F of the Act and also for claiming deduction under Section 10A of the Act before set-off of brought forward losses/unabsorbed depreciation. Thus, it is a case of rejection of a claim on technical reasons and also on account of difference of opinion between the assessee and the Assessing Officer on the methodology of computation of deduction. None of the particulars given in the financial statements were found to be inaccurate. Hence, these facts would not lead to a case of furnishing of inaccurate particulars of income. This deduction has not been claimed by the assessee as an expenditure in the Profit & Loss Account, but has been claimed only in computation of total income. Since this deduction is allowed as an incentive to promote exports, the Hon'ble Delhi High Court in the case of ACIT vs. BSL Software Ltd., (2012) 20 taxmann.com 408 has held that where claim for deduction was made under Section 10A of the Act on the basis of certificate of Accountant which was bona fide and the required facts relating thereto were furnished, then assessee could not be held to be liable for penalty. Accordingly, we are of the view that the Assessing Officer was not justified in levying penalty under Section 271(1)(c) of the Act on the disallowance of claim of deduction under Section 10A of the Act.
4. The next disallowance on which penalty was levied by the Assessing Officer relates to disallowance made under Section 40(a)(ia) of the Act amounting to Rs.53,90,600/-. The Assessing Officer noticed th........