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2019 (1) TMI 525 - AT - Income TaxPenalty u/s 271(1)(c) - sufficient losses to absorb the assessment of cessation of liabilities u/s 41(1) - Held that:- Cessation of liabilities u/s 41(1) will come into picture only when the assessee claimed certain amounts as expenses in the earlier years and the same was also allowed by the revenue. The claims of the assessee were considered as genuine in the earlier years and in such a case no concealment or furnishing of inaccurate particulars can be presumed. In the instant case, it was the inability to reconcile the liabilities and prove the same. Also, as the assessee has closed down its business and there were sufficient losses to absorb the assessment of cessation of liabilities under section 41(1) the assessee has not taken pains to reconcile the differences in the credit balances with M/s. India Cements Ltd and accepted the addition proposed/made by the AO. Such admissions or surrender of claims etc. will not automatically lead to concealment of income or furnishing of inaccurate particulars for the purpose of levying penalty under section 271(1)(c). As observed that if the claims made by the assessee are not genuine or suppressed/inflated or fabricated or malafide etc., the additions/ disallowances or withdrawal of claims etc. will amount to concealment of income or furnishing of inaccurate particulars for the purpose of section 271(1)(c). Similarly, if the transactions shown by the assessee in its return of income is genuine and all the particulars of it are available in the return, mere withdrawal of the claim or not appealing against the assessment by the assessee, will not amount to concealment of income or furnishing of inaccurate particulars. CIT(A) has rightly deleted the penalty levied under section 271(1)(c) - decided against revenue.
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