TMI Blog2011 (12) TMI 286X X X X Extracts X X X X X X X X Extracts X X X X ..... on 12.03.2004. Thereafter, notice u/s 143(2) was issued on 29.11.2004 for the purpose of making assessment. The assessment was made on 28.02.2006 u/s 143(3) of the Act at a loss of Rs. 8,63,28,303/-. The question relevant for us, arising in the assessment, is about the deductibility of expenditure of Rs. 7,80,500/- paid by the assessee to Registrar of Companies for raising the authorized capital. The assessee had claimed the expenditure as revenue expenditure. However, the AO held the expenditure to be of capital nature in the light of decision of Hon'ble Supreme Court in the case of Punjab State Industrial Development Corporation v. CIT, 225 ITR 792 and Brooke Bond India Ltd. v. CIT, 225 ITR 798. Thus, the deduction of this amount was denied. Penalty proceedings u/s 271(1)(c) of the Act were also initiated by mentioning that the assessee has concealed the taxable income by claiming excess expenditure. These proceedings were completed on 28.03.2008 by levying the minimum penalty of Rs. 2,86,833/-. It was mentioned that the assessee furnished inaccurate particulars of income and hence it is a fit case for imposition of penalty u/s 271(1)(c). The levy was confirmed by the CIT(Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been recorded. In the case of Ms. Madhushree Gupta (supra), the Hon'ble Court referred to the provisions contained in section 271(1)(c) and came to the conclusion at page 128 that the satisfaction of concealment of income or furnishing of inaccurate particulars or both should be arrived at during the course of any proceedings, but not in penalty proceedings. The case of the ld. counsel is that satisfaction about furnishing inaccurate particulars has been recorded for the first time in the penalty order, which was missing in the assessment order. Further, at page 143, after referring to some decided cases, the Hon'ble Court mentioned that the notice for initiation of penalty must be issued only after arriving at the satisfaction during the course of assessment proceedings. In this case, we have already come to the conclusion that the satisfaction has been recorded in the course of assessment proceedings. The only question is-whether, the satisfaction is in respect of concealment of income or furnishing inaccurate particulars of income? The AO has clearly mentioned that the assessee has claimed excessive expenditure of Rs. 7,80,500/- in respect of fees paid to Registrar of Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. 3.1 On the other hand, the ld. DR referred to the computation of income, placed in the paper book on page nos. 45 and 46, and submitted that while there is a mention of deduction u/s 35D, there is no mention about the expenditure incurred by way of fees paid to Registrar of Companies. Thus, the expenditure was debited under the miscellaneous head and not shown separately. The expenditure could not have been detected by normal scrutiny as the expenditure was camouflage with other expenses without making any mention thereof in the computation of income. There is no mention of this expenditure separately in the annual accounts also. The audit-report also shows capital expenditure at nil. Accordingly, it is argued that the assessee used subterfuge to claim an expenditure which is clearly and prima facie inadmissible in view of two decisions of Hon'ble Supreme Court relied upon by the AO, which were rendered prior to filing the return of income. This is clearly a case of false claim. 4. We have considered the facts of the case and submissions made before us. The facts are that the assessee claimed an expenditure of Rs. 7,80,500/-, being the fees paid to Registrar of Companies for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh Others, [1979] 118 ITR 326, to the effect that the explanation furnished by the assessee should be taken as bona fide. The decision mainly deals with the applicability of promissory estoppel. Thus, it was rendered in a totally different context. 4.2 Further, reliance has been placed on the decision of "A" Bench of Delhi Tribunal in the case of A.B. Movies Pvt. Ltd. in ITA No. 432(Del)/2009 dated 29.10.2010. The assessee had claimed deduction u/s 80-IB, which was supported by the certificate of the chartered accountant. It was held that the assessee was not liable to be penalized u/s 271(1)(c). The facts of this case are clearly distinguishable. Firstly, the Act makes it obligatory to obtain a certificate from chartered accountant for claiming deduction u/s 80-IB. To this extent, the chartered accountant statutorily assumes the role assigned to him for a particular purpose. No such role could be said to have been assigned to M/s Bajaj Arora, who in any case had furnished the opinion for a limited purpose of the accounting for of the expenditure. Reliance has also been placed on the decision in the case of CIT v. Deep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -term capital gain. This case involved classification of income and on the specific point an opinion was sought. As mentioned earlier, the opinion in the case at hand is not whether the amount is deductible in computing the total income but the mode and manner in which it should be accounted for in the books of account. 4.5 Finally, reliance has also been placed on the decision in the case of AT T Communication Services India (P) Ltd. v. Dy. CIT, decided by Delhi Tribunal in ITA No. 2788(Del)/2006 for assessment year 2001-02 on 19.03.2010, a copy of which has been placed on record. In this case, the assessee had claimed 1/3rd of the expenditure of Rs. 1.00 lakh paid to Registrar of Companies for increasing authorized capital. It is mentioned in the order that it is no doubt true that the claim is not admissible in the light of decision in the case of Brooke Bond India Ltd. (supra), but the fact remains that identical claim was allowed in the immediately preceding year, which would have given bona fide impression to the assessee that the claim is admissible. The facts of this case are also distinguishable because revenue itself had accepted the assessee's claim in the immediately ..... X X X X Extracts X X X X X X X X Extracts X X X X
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