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2009 (8) TMI 677 - HC - Income Tax
Penalty - Concealment of income - The Assessing Officer disallowed the expenses related to the issue of shares u/s 35D of the Act. The Assessing Officer further found that the assessee had claimed 50 percent. of the entertainment expenses on account of the employees participation in the business meeting while entertaining company's guests. In earlier years, the employees participation was estimated only at 25 percent. accordingly he disallowed entertainment expenses. The Assessing officer not treated the loss as long term loss and gain as short term capital gain. Assessing officer also imposed penalty. Commissioner (Appeals) set aside penalty and allowed appeal of assessee, which was upheld by Tribunal. Held that- in case of entertainment expenses, if the Assessing Officer reduced it from 50 percent to 35 percent that could not attract penalty. For the expenses of section 35D matter was remand back. For the capital loss/gain, since a finding of fact regarding 'inadvertent error' was recorded by the two authorities below, and while imposing the penalty the Assessing Officer has nowhere contradicted that the error was not inadvertent, matter need not be interfered.