TMI Blog2014 (7) TMI 167X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to the claimed expenditure on the part of the assessee to attract penal provision u/s 271(1)(c) of the Act - CIT(A) has rightly deleted the penalty. If the assesee is able to furnish bonafide reason for the claim or the claim made was a debatable issue in view of the provisions of the law in that case penalty u/s 271 (1)(c) is not leviable - Such precaution is being taken within the provision of the law keeping in mind that the action u/s 271(1)(c) of the Act is penal in nature - When an assesee establishes and shows that he had acted bonafidely and all facts and material were disclosed by him, penalty should not be imposed as per clause B to Explanation 1to section 271 (1)(c) of the Act - mere submission of a claim which is incorrect in law would not amount to giving inaccurate particulars of income, hence penalty for concealment cannot be levied on the same. There is no doubt on the genuineness of the claimed expenditure, the only question was the treatment given by the assesee to those expenditure which was a debatable issue and further that there was no allegation that the assesee had not disclosed full facts relating to the claimed expenditure as it was disallowed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anation of the assesee has levied the penalty of ₹ 2,52,85,990/- u/ s271(1)(c) of the Act. The Ld. CIT(A) has deleted the same against which the present appeal has been preferred. 5. In support of the ground the Ld. DR has basically placed reliance on the penalty order. He submitted that the Ld. CIT(A) while deleting the penalty has failed to appreciate that the assessee has deliberately claimed the above expenses which were not allowable. He submitted that the disclosure made by the asseseee in the notes to account only proves that the assessee had claimed such expenses fully knowing that these were not allowable. Thus there was concealment of particulars of income and furnishing inaccurate particulars thereof on the part of the assessee to attract the penal provisions. In support he placed reliance on the following decisions :- Chadha Sugars (P) Ltd. vs. ACIT (2012) 18 taxmann.com 244 (Delhi) CIT vs. Gold Coin Health Food (P) Ltd. (2008) 172 taxmann 386 (SC) CIT vs. Unipol Chemicals Intermediates Ltd. (2012) 27 taxmann.com 87 (SC) JCIT vs. Saheli Leasing Industries Ltd. (2010) 324 ITR 170 (SC) 6. Ld. AR pointed out that it is second round of the appeal b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l these appeals the ITAT decided against the revenue and in favour of the assessee without going into the merits of the question in each case so in order to return a positive finding of fact that the assesee in each case had concealed the particulars of his income or furnished inaccurate particulars of such income. Nor did it examine the quantum of penalty in each case. ITAT decided the appeals before it on the understanding that where there was a returned loss and a reduced loss was assessed there could be no question of imposing of penalty u/s 271 (1) of the Act. This understanding we have indicated above does not hold good for the period between 1976 and 2003 amendments. This being the position answering the question as indicated above and allowing all the appeals we remand all these cases to the ITAT for disposal of merits. No costs . 9. In the light of above the questions stand answered similarly in the present case and the matter remanded to the Tribunal for disposal on merits. 10. Having gone through the order of the penalty as well as first appellate order we find that the Ld. CIT(A) has deleted the penalty on two basis. Firstly that when assessment has been made a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of law have not specified in terms of time as to what would qualify as enduring. There is no definition of enduring in Income Tax Act 1961. Only there is a definition of short term capital asset in clause (42A) of section 2 which provides that short term capital asset means a capital asset held by an assessee for not more than 36 months immediately preceding the date of transfer. Although the definition is strictly not applicable to the facts of the assessee s case, it is debatable whether an asst which lasts only for a period of three years (there is no dispute regarding this) should be regarded as one acquired for the enduring benefit of the trade. In respect of addition of ₹ 2,21,225/- the explanation furnished by the assessee was that the difference between the amount debited by the assesee and that admitted by the payee was on account of TDS and short payment which was not reflected in payee s books. 13. There is nothing on record to suggest that the above explanation furnished by the assesee against the claimed expenditure was not bonafide. Thus in our view there was no reason to arrive at the conclusion by the AO that there was concealment of particulars of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere was concealment of particulars of income or furnishing inaccurate particulars thereof by the assessee towards the addition made. If the assesee is able to furnish bonafide reason for the claim or the claim made was a debatable issue in view of the provisions of the law and in view of the decisions of the Hon ble Courts, in that case penalty u/s 271 (1)(c) is not leviable. Such precaution is being taken within the provision of the law keeping in mind that the action u/s 271(1)(c) of the Act is penal in nature. So we have to examine in the present case as to whether the reason shown for the claimed expenditure were bonafide or not. If it was bonafide then there is no question of levy of penalty. In the decision of CIT vs. Indian Visit.com (P) Ltd. (supra) relied upon by the Ld. AR the assessee was engaged in travel business, made all kinds of arrangements for its clients such as booking of hotel rooms, providing taxi services, booking of air tickets and railway tickets, etc. During relevant assessment year assesee incurred on certain expenditure on development of ots website. In such arrangement the assessee s client can use assessee s website for the purpose of availing of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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