RAKESH KUMAR GARG, J. - (1.) THE Revenue has filed the present appeal under s. 260A of the IT Act, 1961 (for short 'the Act') against the order of the ITA No. 245/Chandi/2007 for the asst. yr. 2003 -04 raising the following substantial question of law : "Whether on the facts and in the circumstances of the case, the Hon'ble Tribunal is justified in law in deleting the penalty imposed under s. 271(1)(c) of the IT Act, 1961, when the assessee company had deliberately furnished inaccurate particulars of its income in the original return and had admitted the mistake by filing the revised return only after the defect was pointed out by the Department - It was found that the assessee had claimed 100 per cent deduction under s. 80 -IB of the Act in the original return, whereas the company was entitled to only 30 per cent deduction as per the said provisions. It was admitted by the assessee that the deduction under s. 80 -IB of the Act was being claimed wrongly by mistake. Thereafter, the assessee s. 80 -IB and thereafter the assessment was completed. The AO also initiated penalty proceedings under s. 274 r/w s. under s. 271(1)(c) for furnishing inaccurate and concealing particulars of income. The said order of penalty was challenged by the assessee by filing appeal before the Commissioner of Income -tax (Appeals), Chandigarh [for short the "CIT(A)"] on the ground that the mistake committed by the assessee was bona fide and therefore, the assessee cannot appeal and deleted the penalty.
(2.) Aggrieved against the said order, the Revenue filed the appeal before the Tribunal raising the plea that the assessee had deliberately concealed the particulars of income as the assessee had claimed wrong deduction and therefore, the penalty proceedings were rightly initiated against the assessee. However, the appeal of the Revenue was dismissed by the Tribunal holding that no definite finding has been recorded by the AO that there is a concealment of income by the assessee and it was merely a case of a wrong claim under mistaken belief as to for which five years the assessee was entitled to deduction under s. 80 -IB of the Act and it was a debatable issue.
(3.) We have heard Shri S.K. Garg Narwana, advocate, learned counsel for the Revenue. The facts of the case are not in dispute. The assessee was entitled to 100 per cent deduction under s. 80 -IB of the Act for five assessment years beginning with the initial assessment year of the profits and gains derived from such an i.e., 3 days of the financial year 1997 -98 (asst. yr. 1998 -99) and the assessee has taken deduction under s. 80 -IB inadvertently taking the first assessment year of exemption starting from 1999 -2000 and the said mistake was a bona fide mistake committed by the chartered accountant of the assessee who has duly audited the return. The scope of reasonable cause/bona fide mistake has been debated upon in a catena of judgments. The Hon'ble apex Court in the case of Hindustan Steel Ltd. vs. State of Orissa (1972) 83 ITR 26 (SC) has categorically held that penalty is not impossible if there is no conscious breach of law. In the present case, since the main dispute was for calculation of number of years, it cannot be said that the assessee deliberately concealed the particulars of income or furnished inaccurate particulars of income and even if it is presumed that the counsel for the assessee made a bona fide mistake in calculation of such assessment years, still it can be said that no penalty should be imposed upon the assessee for the mistake of his counsel. Even otherwise, the Tribunal has given a specific finding that the Revenue has failed to pinpoint any specific defect in the conclusions of the CIT(A).;