Smt. Diva Singh, Judicial Member - This is an appeal filed by the assessee against the order dated, 18th November, 2002, of CIT(A)-XVI, New Delhi, pertaining to assessment year 1996-97.

2. The sole issue raised by the assessee in the present appeal pertains to the penalty imposed and upheld under section 271(1)(c) of the Act. Various grounds have been raised by the assessee praying for the quashing of penalty imposed to the tune of rupees five crores fifty lakhs odd.

2.1 The relevant facts of the case are that the assessee-company was incorporated on 9th May, 1995, and this is the first year of operation of the company. Its return was filed on 30th November, 1996, declaring a taxable income of Rs. 2,14,50,340 and assessment under section 143(3) was completed on a total income of Rs. 14,10,55,490. The total income of the assessee comprised of the business income received as technical fee from Escorts Ltd., and income from other sources as interest income. In the year under consideration, the assessee entered in an agreement on 14th July, 1995, with Escorts Ltd., and as per this agreement, the assessee-company assigned the right to use its technical know-how for a period of three years to Escorts Ltd. for a lump sum consideration of 60 lakhs US $. The same was to be received in Indian rupees under a tripartite agreement dated 14th July, 1995. The assessee, as such, received an amount of Rs. 15,68,50,000 which was treated by the assessee as advance in its books of account and only a sum of Rs. 3,72,44,848 was credited to the P & L a/c as the amount attributable for the period 15th July, 1995 to 31st March, 1996. The balance amount was shown as liability and offered as income in the subsequent assessment years proportionate to the period of user. This action of the assessee in spreading over of the income was not accepted by the Assessing Officer. Relying upon E.D. Sassoon & Co. Ltd. v. CIT [1954] 26 ITR 27 (SC), it was held by the Assessing Officer that the entire amount received by the assessee-company accrued in the year under consideration. As such, the amount of Rs. 11,96,05,152 shown as liability was added as income. As a result of this, the entire amount received by the assessee-company as technical fee was assessed as its income in the relevant year. This action of the Assessing Officer was confirmed by the CIT(A) and the Tribunal also dismissed the appeal of the assessee.

2.2 The penalty proceedings under section 271(1)(c) were initiated in this background. Before the Assessing Officer, the assessee relied upon the following decisions :

1.CIT v. Anwar Ali [1970] 76 ITR 696 (SC)

2.CIT v. Khoday Eswarsa & Sons [1972] 83 ITR 369 (SC)

3.CIT v. N.A. Mohamed Haneef [1972] 83 ITR 215 (SC)

4.R. Madhavan Nair v. CIT [1973] 87 ITR 362 (Ker.)

5.Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26 (SC)

6.CIT v. Devi Dayal Aluminium Industries (P.) Ltd. [1988] 171 ITR 683¹ (All.)

7.CIT v. Santosh Financiers [2001] 247 ITR 742² (Ker.)

8.Madras Industrial Investment Corpn. Ltd. v. CIT [1997] 225 ITR 802³ (SC)

9.R.V. Pandit v. Asstt. CIT [1999] 65 TTJ (Mum.) 529

10.CIT v. Ace Builders (P.) Ltd. [1993] 202 ITR 324¹⁰ (Bom.)

11.U.P. State Industrial Development Corpn. Ltd. v. CIT [1981] 130 ITR 835⁵ (All.)

12.CIT v. Jagabandhu Prasanna Kumar Ruplal Sen Poddar [1982] 133 ITR 156 (Cal.)

13.CIT v. G.D. Naidu [1987] 165 ITR 63⁶ (Mad.)

14.Nuchem Ltd. v. Dy. CIT [1993] 47 ITD 487 (Delhi)

15.Burmah Shell Oil Storage & Distributing Co. of India Ltd. v. ITO [1978] 112 ITR 592 (Cal.) and ITO v. Burmah Shell Oil Storage & Distributing Co. of India Ltd. [1987] 163 ITR 496⁷ (Cal.)

16.McDowell & Co. Ltd. v. CTO [1985] 154 ITR 148⁸ (SC)

so as to contend that :

"New Holland Tractors India (P) Ltd. has made full and true disclosure, in its return of income, regarding the receipt of entire technical know-how in the subject assessment year and the period over which it accrued to NHTIPL. Accordingly, NHTIPL has neither concealed any particular of its inc