Debatable/bonafide claim cannot be treated as concealment of income merely because it was disallowed

In The D.C.I.T., Vs. Sh.Vipan Guppta Prop., the Assessing Officer had restricted the assessees claim of deduction u/s 80 IC of the Act to 25% of the eligible profits as against 100% claimed by the assessee on account of substantial expansion undertaken by it, for the reason that it was the 8th year since commencement of production by the assessee in the area specified by the section, while as per the section deduction @100% of the eligible profits was allowable only for the first five years from the date of commencement of production and thereafter @ 25% of the profits for the next five years. The said disallowance was upheld in further appeals, both by the CIT(A) and the ITAT.

On appeal the Ld.CIT(Appeals) deleted the penalty levied u/s 271(1)(c) of the Act relying upon the order of the Coordinate Bench of the Tribunal in the case of M/s Hycron Electronics Vs. ITO for assessment year 2009-10 in ITA No.326/Chd/2005. 

Aggrieved by the action of the Ld.CIT(Appeals), the Revenue has come up in appeal before the ITAT. The Ld. DR relied upon the order of the Assessing Officer while the Ld. counsel for assessee placed reliance upon the order of the Ld.CIT(Appeals).

The ITAT found no infirmity in the order of the Ld.CIT(Appeals) in deleting the penalty levied following the decision of the Coordinate Bench in the case of M/s Hycron Electronics Vs. ITO in ITA No.326/Chd/2015 relating to assessment year 2009-10. The coordinate Bench , taking note of and agreeing with the assessees contention that the claim was based on interpretation of the section so as to allow 100% deduction of profits on substantial expansion undertaken, found the claim of the assessee to be bonafide and not false or wrong.