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2023 (6) TMI 1266 - AT - Income TaxLevy of penalty u/s 271(1)(c) - Addition confirmed by CIT(A) for concealment of income - HELD THAT:- We find that the quantum proceeding and the penalty proceeding are different. Any addition or disallowances made under quantum proceeding do not ipso facto empower the revenue authority to levy penalty u/s 271(1)(c) - In the penalty proceeding it has to be proved by the revenue based on cogent material that the assessee has either concealed income or furnished inaccurate particulars of income. Disallowances made during the quantum proceeding is of interest expenses which was considered as excessive by the Revenue authority - What is transpired that it is not the case that claim of the assessee altogether found incorrect or assessee has not incurred such interest expenses. As such it is a case where revenue authority was of opinion that the assessee was paying interest at excessive rate as compared to market rate. Hence, in our considered opinion, the same does not amount to concealment of income or furnishing incorrect particular of income. Penalty u/s 271(1)(c) of the cannot be levied merely for the reason that certain claim made by the assessee is not allowable or excessive in the opinion of revenue authority. In holding so we draw support and guidance from the judgment of Reliance Petroproducts Pvt .Ltd [2010 (3) TMI 80 - SUPREME COURT] The addition made was based on estimation of reasonable rate of interest. As such the assessee paid interest at different rate, the AO estimated different and the learned CIT-A further estimated different rate of interest. It settled position of law by the various High Court that the no penalty under section 271(1)(c) can be sustained in case of estimated addition. See Norton Electronics System Pvt. Ltd [2014 (2) TMI 606 - ALLAHABAD HIGH COURT] - Thus in view of the above discussion we are of the opinion that no penalty u/s 271(1)(c) of the Act can be levied on addition/disallowances of interest expenditure found to excessive as compared to market rate. Nature of expenses - computer repair maintenance expenses and excess depreciation - purchase of computer to be treated as revenue or capital expenditure - HELD THAT:- Again it is case of difference of opinion where assessee claimed certain deduction in the return of income which was not accepted by the AO. Hence, the question of concealment of income or furnishing inaccurate particular of income does not arise as held by the Hon’ble Supreme Court in case Reliance Petroproducts Pvt .Ltd (supra). Therefore, we are of the opinion that no penalty under section 271(1)(c) of the Act can be levied on addition/disallowances of computer repair maintenance expenses and excess depreciation. Disallowances against Credit card expense and computer expenses respectively for the reason that same were either not supported by the documentary evidences or held as personal in nature - The question has been answered in preceding paragraph of this order that the quantum and penalty proceeding are different and any addition/disallowances made in quantum proceeding do not ipso facto empower the revenue authority to levy penalty under section 271(1)(c) - As such revenue authority have to prove based on cogent material that the assessee has concealed income willfully with mala fide intension. There is no such finding of the Revenue authority in the penalty proceeding. Further considering the amount involve we do not agree with contention of the revenue of authority that the assessee concealed his income by claiming deduction of impugned credit card expense and computer expenses. We hereby set aside the finding of the learned CIT(A) and direct the AO to delete the penalty levied - Decided in favour of assessee.
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