9911796707
TMI Blog2012 (5) TMI 344X X X X Extracts X X X X X X X X Extracts X X X X ..... case are that the assessee filed return of income declaring income of Rs.4,93,002/- for AY 2006-07. While finalizing the assessment u/s 143(3) of the IT Act the AO made total additioin of Rs.14,42,203/- and imposed penalty for the addition of Rs.13,57,400/-. The assessee did not prefer appeal on this addition made by the AO. However, the assessee contested that the penalty levied due to the addition made by invoking section 40(a) (ia) of the IT Act do not amount to furnishing of inaccurate particulars of income because the AO has not doubted the payment made to the parties. 3. The assessee carried the matter in appeal and it was submitted before the learned CIT(A) in regard to commission expenses of Rs.10,46,163/- that the said amount was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has not been proved to be unsatisfactory and therefore, penalty should not be levied. In support of his above contentions, the assessee referred to the decisions in the case of Twins Star Jupitar Co-Op. Housing Society Ltd. Vs ITO, 118 IDT, Star International Pvt. Ltd. Vs ACIT, 308 ITR 33 and Mahavir Irrigation Pvt. Ltd. 117 ITD 9. 4. The learned CIT(A) considering the submissions made by the assessee and the penalty order and by referring to the decision of the Hon'ble Supreme Court in the case of Chairman, SEBI Vs Sriram Mutual Fund & Anr. (2006) SCC 361, wherein it has been inter alia held "that while considering an appeal against an order u/s. 271(1) (c) what is required to be examined is the record which the officer imposing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enses of Rs.1,10,200/- (totalling to Rs.13,57,400/-) have been disallowed holding that the assessee has violated the provisions of section 40(a) (ia) of the IT Act and that the AO has levied penalty on the said amount being fully satisfied that the assessee has furnished inaccurate particulars of its income to the extent of Rs.13,57,400/- and treating it to be a fit case for levying penalty. The assessee also submitted that the issue is covered by the decision of the Hon'ble Supreme Court in the case of CIT Vs Reliance Petro Producs Pvt. Ltd., in SLP(C) NO.27161 of 2008 dated 17th March, 2010 (PB-4) wherein it has been held as under: "Income tax- 271 (1) (c) - Merely because the assessee had claimed the expenditure, which claim was not acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - and even thereafter deduction was not granted to it. Ld. First Appellate Authority has accepted the plea of assessee that it was a bonafide error; ++ taking into consideration the overall facts and circumstances particularly the amount of disallowance vis a vis the returned income, we are of the view that it is a bonafide lapse at the end of the assessee. There is no deliberate attempt to conceal the particulars of income. Ld. CIT(A) has rightly appreciated the facts and circumstances we do not see any reason to interfere in his order." The assessee further submitted that the facts in the above case are identical to that of the present case of the assessee and the issue is covered by the above decision. 6.2 The assessee further submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormation and the assessee is not guilty of furnishing of inaccurate particulars of income. In our opinion, the conditions laid down in section 271(1) (c) of the Act is not complied with. Being so, levy of penalty is not justified merely because the assessee has claimed certain expenditure that expenditure is not eligible in view of the provisions of section 40(a) (ia) of the Act and for that reason, expenditure is disallowed. Penalty cannot be levied for mere making of a claim of expenditure which is not sustainable and deletion of penalty by the learned CIT(A) is justified. We place reliance on the judgment of the Hon'ble Supreme Court in the case of CIT Vs. Reliance Petro Products (P) Ltd. (322 ITR 158 (SC). Accordingly the ground raised ..... X X X X Extracts X X X X X X X X Extracts X X X X
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