TMI Blog2011 (4) TMI 677X X X X Extracts X X X X X X X X Extracts X X X X ..... AJPAL YADAV, AND B.C. MEENA, JJ Represented by: Dr. Shri Rakesh Gupta and Shri Tarun for the Appellant. Mrs. Anusha Khurana for the Respondent. ORDER B.C. Meena, Accountant Member - This appeal filed by the assessee arises out of the order of CIT(A)-XVI, New Delhi, dt. 18th Feb., 2010. The grounds of appeal read as under : "1. The penalty of Rs. 8,07,300 imposed under section 271(1)(c) is against facts and law and be directed to be deleted. 2. The penalty order was without jurisdiction and in any case it was time-barred. 3. The assessee reserves the right to add/alter/delete/modify any grounds of appeal at the time of hearing." 2. The only issue involved in the appeal is sustaining the penalty of Rs. 8,07,284 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by in-house person who was not well-acquainted with the computation of income as this was the first year of the company. The assessee has disclosed all the information and also filed the audited accounts along with return. While filing the return, an inadvertent mistake happened by way of claiming loss of Rs. 23,98,353. As soon as it came to the assessee's notice, the same was rectified by way of surrendering and also by way of revising the return for subsequent year. Thus, there was no loss of revenue. There was no intention to do so. There was no mala fide on assessee's part as far as the claim of expenses was concerned. It was an inadvertent error on account of being the first year of the company and he placed reliance on the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has surrendered the claim of expenditure voluntarily and he vehemently pleaded that it was a bona fide mistake crept into the computation of income while filing the return of income by the in-house person being the first year of the company. He relied on the decision of Tribunal Delhi "I" Bench in the case of ITO v. Mokul Finance (P.) Ltd. [2009] 29 SOT 11 and Tribunal, Mumbai 'C' Bench in the case of Glorious Reality (P.) Ltd. v. ITO [2009] 29 SOT 292. He pleaded that the amount which was surrendered by the assessee voluntarily was also highly debatable legally, therefore, the penalty should not be levied. 5. On the other hand, learned Departmental Representative relied on the orders of the authorities below. 6. After hearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ures of the assessee company are excessive or unreasonable vis-a-vis its legitimate business requirements. In the case of the corporate assessee's such expenses have to be allowed as deduction irrespective of whether or not the assessee is engaged in active business and even if assessee has only passive incomes. The CIT(A) was, therefore, justified in his conclusions. That is, however, not the only reason why the disallowance made by the AO was unsustainable in law. The whole cause of action of disallowance of expenses is in the background of AO's observation that the assessee did not carry out any business transactions which at best was AO's finding about an activity of business not being functional in the relevant previous year. Not carry ..... X X X X Extracts X X X X X X X X Extracts X X X X
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