TMI Blog2014 (12) TMI 1058X X X X Extracts X X X X X X X X Extracts X X X X ..... alty shall be imposed – relying upon CIT vs. Reliance Petro Products Pvt. Limited [2010 (3) TMI 80 - SUPREME COURT] - no penalty u/s 271(1)(c) of the Act can be imposed because the Revenue Authority has not disclosed any facts in its return of income - even otherwise Revenue Authority has failed to establish that in the return of income assessee has either been shown as inaccurate or incorrect particulars of its income - merely because the expenditure claimed by the assessee has been disallowed by the Revenue Authority does not lead to an inference that it is a case of furnishing inaccurate particulars of income - assessee has offered its bona fide explanation which was not proved false by the Revenue Authority – FAA has passed the well-reasoned order and the order of the CIT(A) is upheld – Decided against revenue. - ITA No. 182/Del/2013 - - - Dated:- 29-10-2014 - S. V. Mehrotra, AM And H. S. Sidhu,JM,JJ. For the Petitioner : Smt Parwinder Kaur, Sr. DR For the Respondent : Shri S. K. Aggarwal, CA ORDER Per H. S. Sidhu,JM. The Revenue has filed the present appeal against the impugned order dated 23.10.2012 passed by the Commissioner of Income Tax (Appeals)-V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO by estimating interest and foreign exchange loss on External Commercial Borrowing (ECB) as allocable to STP unit amounting to ₹ 16,91,685/- estimated at 7% of total amount. 2.1 Against the aforesaid assessment order, the appellant preferred an appeal with the CIT(Appeals)-XX, New Delhi. However, during the appellate proceeding, the appellant did not press the issue of allocation of interest and foreign exchange loss and the appeal was decided by the ld. CIT(A) vide its order dated 29th July, 2009 [Appeal No. 140/2007-08], disposing off Transfer Pricing issues on merits. 2.2 Subsequently, a notice dated 17.03.2011 was issued by the AO proposing to finalize the penalty proceedings u/s 271(1)(c) of the Act. The appellant filed its written submissions dated 23rd March, 2011. Thereafter, the AO passed the impugned penalty order dated 24.03.2011 levying penalty of ₹ 6,03,930/- as per details below: (1) Estimated amount of Interest and Foreign Exchange loss allocated to STP unit in the assessment order and consequent reduction in deduction allowed u/s 10A and treated as furnishing of inaccurate particulars of income for levying penalty u/s 271(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penses eligible for deduction u/s 10A, at the time of filing the return of income. Merely because the AO did not agree with the submissions made by the appellant, the same cannot be said to be furnishing of inaccurate particulars of income for the purposes of levying penalty u/s 271(1)(c). The AO has not mentioned in the penalty order as to which particulars or facts submitted by the appellant are incorrect. The disallowance of expenditure or rejection of claim cannot result in automatic levy of penalty u/s 271(1)(c). The assessment has been done by the AO by adopting an ad hoc percentage of 7% of interest and foreign exchange loss as attributable to STP unit of the appellant and thus reducing the deduction u/s 10A. Similar apportionment was made by the AO in the preceding assessment year 2001-02 which was deleted by the Hon'ble ITAT, Delhi. As the facts and the issue involved is same, it is clear that the estimated adjustment made by the ld. AO is merely due to difference of opinion and not due to any fault of appellant, which can be subjected to penalty provisions of section 271(1)(c). In light of the above, I am of the view that the AO is completely unjustified in levying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has also been given by the Hon'ble Punjab Haryana High Court in the case of CIT vs. Rubber Udyog Vikas Pvt. Ltd., 335 ITR 558 (P H). The relevant paragraph of the judgment of Hon'ble Delhi High Court are reproduced as under: The Hon'ble High Court of Delhi in the case of CIT vs. DCM Ltd. reported in 359 ITR 102 has been held as under: 10. Law does not bar or prohibit an assessee for making a claim, which he believes may be accepted or is plausible. When such a claim is made during the course of regular or scrutiny assessment, liberal view is required to be taken as necessarily the claim is bound to be carefully scrutinized both on facts and in law. Full probe and appraisal is natural and normal. Threat of penalty cannot become a gag and/or haunt an assessee for making a claim which may be erroneous or wrong, when it is made during the course of the assessment proceedings. Normally, penalty proceedings in such cases should not be initiated unless there are valid or good grounds to show that factual were provided in the computation. Law does not bar or prohibit a person from making a claim, when he knows the matter is going to be examined by the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levy of penalty. Held that it was clear from orders of the appellate authorities that there was no concealment on the part of the assessee and in these circumstances penalty could not be imposed. 330 ITR 547 (Del) CIT vs. Krishna Maruti Ltd. Certain expenditure claimed by the assessee as revenue expenditure was disallowed by the Tribunal holding the expenditure to be of capital nature. On the basis penalty proceedings were also initiated by the Assessing Officer u/s 271(1)(c). The Commissioner (Appeals) as well as the Tribunal, however, set aside the penalty holding that the claim made by the assessee that expenses incurred were revenue in nature, was debatable and, therefore, it could not attract penalty. Held that no question of law arose from the Tribunal's order. [Emphasis supplied] 328 ITR 611 (Del) CIT vs. IFCI Ltd. The assessee had claimed loss on account of investment written off. The said claim was disallowed by the AO. Thereafter, the AO imposed penalty upon assessee u/s 271(1)(c) on ground that assessee had deliberately furnished inaccurate particulars of income by way of loss under the head 'investment written off'. Held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1)(c) and, therefore, Tribunal cancelled penalty Whether no substantial question of law arose from Tribunal's order Held, yes 186 Taxman 183 (Del) CIT vs. M/s Deekasha Holding Ltd. In respect of first addition, explanation of the assessee was that though the assessee had excluded ₹ 2,69,680/- under the head? Profit and sale of cars?Capital gains in respect of sale of these cars was not included by inadvertence likewise in respect of claim of deduction of expenses under the head?Professional Development Expenses was that the expenses were in fact incurred for sponsoring its director for post graduation course etc. in the field of law and it was the bona fide claim made by the assessee. Same was the plea in respect of advertisement expenses. Where the assessee had disclosed all the facts before the AO and the AO, on consideration of the evidence furnished by the assessee, come to the conclusion that the claim has not been substantiated with sufficient evidence, does not automatically result in levy of penalty. Where the assessee has disclosed all material facts in regard to the claim made the onus placed upon the assessee stood discharged. In the instant c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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