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2021 (10) TMI 66 - ITAT DELHIPenalty u/s 271(1)(c) - whether the expenses are capital or revenue in nature? - debatable issue - addition being 50% of the expenditure debited in the profit & loss account under different heads and for making addition being the alleged difference between the income shown in 26AS and income shown in the profit & loss account - whether the assessee has concealed particulars of income or has furnished inaccurate particulars of income during assessment proceedings? - HELD THAT:- Mere disallowance of expenditure claimed as per books of account, penalty u/s 271(1)(c) of the Act cannot be levied unless any particulars in the return of income has been found to be false or incorrect. Making ad hoc disallowance by the AO to the extent of 50% of the expenditure claimed by the assessee on account of salary & wages, communication expenses, marketing expenses, professional & legal expenses and tour & travel expenses by holding the same to be capital in nature itself shows that the AO himself was not satisfied as to in which of the case assessee furnished inaccurate particulars because everything decided by the AO as well as ld. CIT (A) on ad hoc basis on the basis of their guesswork. Even otherwise, we fail to comprehend as to what enduring benefit has been created in favour of the assessee by incurring expenses on salary & wages, communication expenses, marketing expenses etc. because these are expenses which are necessary to carry out day-to-day business. Moreover, it is a debatable issue if the expenditures are capital or revenue in nature as has been held by Hon’ble Punjab & Haryana High Court in case of CIT vs. Gurdaspur Cooperative Sugar Mills Ltd[2013 (3) TMI 175 - PUNJAB AND HARYANA HIGH COURT]. Also as perused the documents brought on record by the assessee hich go to shows that how much revenue was booked by the assessee and how much was the reimbursement of the expenses leading to no difference in the income shown in the 26AS and profit & loss account. Ld. DR for the Revenue has failed to point out any difference in the income shown in Form 26AS and profit & loss account as explained by the assessee. So, on this score also, the Revenue has failed to prove if inaccurate particulars have been furnished by the assessee. AO has failed to make out the case of furnishing of inaccurate particulars of income by the assessee so as to levy the penalty. Consequently, question framed is decided in favour of the assessee and against the Revenue.
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