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2017 (1) TMI 625 - AT - Income TaxLevying the penalty u/s. 271(1)(c) - adjustment to the Book Profit as well as to the normal computation of the total income - Additions have been confirmed and accepted by the assessee - Held that:- The issue of disallowance has already reached finality in the hands of the assessee for both the assessment years against the assessee. It is a settled principle of law that where there are two opinions on allowability of expenditure , it makes it debatable and on such disallowance penalty u/s 271(1) (c) cannot be levied. The present disallowance of advance depreciation is ultimately settled by the Hon’ble Supreme Court of India and that too in favor of the assessee, therefore even if the assessee has accepted the addition in its hands, it cannot be said that assessee has furnished inaccurate particulars of income. Hence on this disallowance penalty u/s 271(1) ( c) cannot be levied. See CIT V Reliance Petro products Limited [2010 (3) TMI 80 - SUPREME COURT ] Whether the assessee files an appeal or did not contest the addition or disallowance at higher forums , it does not have any bearing on the statutory provisions of section 271(1) ( c) of the I.T. Act, 1961In view of this, we do not incline to uphold the order of the AO on levy of penalty under section 271(1) ( c) of the I.T. Act, on advance against depreciation disallowed while computing the Book Profit under section 115JB of the I.T. Act as well as under the normal computation of total income. In view of this, we do not find any infirmity in the order of the Ld. CIT(A) in cancelling the penalty levied by the AO. - Decided in favour of assessee Disallowances of Income Tax recovery and Transmission charges - Held that:- Both these issues were amply disclosed in Note No. 14(d) and 17 of the Audited Accounts of the assesee. These Notes also shows that the same have been based on the order of the CERC and the claim has been disputed by the payer. In view of this, the income have not been shown by the assessee for tax purposes. Subsequently, on the submission of the assessee, sum have been added to the income of the assessee for the assessment year 2007-08. On that basis, the addition was made in assessment year 2005-06. In the present case, the accrual of the income itself is in doubt when the payee has provided the same, but the payer has not admitted the liability. Further, the Assessee itself has brought on record before the AO that as the same amounts have been received in assessment year 2007-08, it can be added in the income of the current year and may be excluded from assessment year 2007-08. The full facts of particular dispute and uncertainty arising on account of receipt of the income were disclosed and reason why assessee did not offer it for taxation was also available before ld AO. Therefore, it cannot be said that assessee has furnished inaccurate particulars thereof. No penalty under section 271(1)(c) on both these disallowances. - Decided in favour of assessee
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