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2021 (2) TMI 1011 - AT - Income TaxPenalty u/s. 271(1)(c) - disallowance of ‘legal and professional’ expenses and disallowance account of building repair expenses - HELD THAT:- Disallowance of ‘legal and professional’ expenses has been made merely on the ground that the invoice mentions that the assessee has received hence it was treated as capital in nature and not revenue in nature. Simply because, the consultancy services has been treated as capital in nature by the Assessing Officer that does not mean that assessee has furnished any inaccurate particulars of income so as to warrant levy of penalty u/s.271(1)(c), especially when there is no doubt about the factum of incurring of such expenditure and the genuineness of which stands established. In these facts, the penalty on such disallowance is directed to be deleted. Building repair expenses disallowance assessee has carried out repair and maintenance for which it has paid to third party M/s. Sarvamanglam Pvt. Ltd. and these repair and maintenance was carried out on the rented place taken by the assessee for its business. However, out of total disallowance of ₹ 31,93,239/- the amount finally sustained in the quantum proceedings was ₹ 19.93 lacs. Thus, part of the same expenditure has been allowed. During the course of penalty proceedings, before the ld. CIT (A), assessee has filed all the details and evidences for the amount of ₹ 19,93,239/- for which ld. CIT(A) has refused to admit. Penalty proceedings are separate and distinct from assessment proceedings and the assessee during the course of penalty proceedings can substantiate its claim by providing evidences or explaination that it is not guilty for furnishing of any inaccurate particulars of income - Penalty is not adjunct to assessment, it’s a separate proceedings and assessee has right to rebut the charges levied on him which he may not have in quantum due to any circumstances. Accordingly, the action of the ld. CIT (A) to reject these evidences which goes to prove the incurring of expenditure by the assessee which is ostensibly revenue in nature - it cannot be held that the assessee had furnished any inaccurate particulars of income so as to warrant any levy of penalty u/s. 271(1)(c) - Decided in favour of assessee.
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