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TMI Blog2015 (3) TMI 532X X X X Extracts X X X X X X X X Extracts X X X X ..... xpense. 3. On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (A) has grossly erred in affirming the decision of the AO for imposing penalty u/s 271(1)(c) on disallowance of Rs. 9,23,000/- on account of replacement of plant and machinery being held as capital expenditure. 4. On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (A) has grossly erred in affirming the decision of the AO for imposing penalty u/s 271(1)(c) on disallowance of Rs. 5,24,079/- u/s 40A(3) of Income Tax Act, 1961. 5. On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (A) has grossly erred in affirming the decision of the AO for imposing penalty u/s 271(1)(c) on disallowance of Rs. 48,30,254/- u/s 43B of Income Tax Act, 1961." 2. The assessee has challenged levy of penalty on following disallowances:- (i) Disallowance of claim of Rs. 43,64,230 u/s 80-I on account of reallocation of administrative expenses; (ii) Disallowance of Rs. 9,23,000 on account of replacement and repairs of plant and machinery being held as capital expenditure. (iii) Disallowance of Rs. 5,24,079 made u/s 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, the basis adopted by the assessee by allocating expenses was as a result of Tribunal order in assessee's own case. Hence, no penalty for furnishing of inaccurate particulars can be levied. 3.4 On the other hand, the learned Departmental Representative, strongly relied upon the order of the CIT(A). 3.5 We have heard the rival submissions and also perused the relevant material placed on record. The difference in the claim of deduction u/s 80-IA is mainly on the basis of allocation of administrative expenses, which has been allocated in the ratio of turnover. The assessee's case had been that it has adopted the basis of allocation based on the precedent of Tribunal order for assessment year 1983-84, which has been accepted by the department in subsequent assessment years. In this year, the basis of allocation of expenses has been changed. Under these facts it cannot lead to any inference that the assessee has furnished any inaccurate particulars, which warrants levying of penalty u/s. 271(1)(c) because change in the basis of allocation of expenses is matter of opinion. Thus, the penalty levied on this score is deleted. 4. ADDITION U/S 40A(3) 4.1 Brief facts are that, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he employees, genuineness of which have not been doubted. The disallowances have been made mainly on technical ground. In our opinion, such a disallowance does not warrant levy of penalty, because there is no furnishing of inaccurate particulars or concealment of income, because, it is not an absolute law that any payment made in cash excess of Rs. 10,000 is to be disallowed. Commercial expediency, business consideration and other factors are also required to be seen. Hence, we delete the penalty, which has been confirmed on such a disallowance. 5. REPAIRS AND REPLACEMENT OF PLANT AND MACHINERY : 5.1 The Assessing Officer has disallowed a sum of Rs. 50,93,829 towards replacement of assets, against which, the CIT(A) has partly allowed the claim of the assessee by directing the AO to verify whether each and every items covered in the assets were independent or not, and whether it is a part of any plant or machinery. After giving effect to the CIT(A)'s order, the AO has disallowed a specific sum of Rs. 9,23,000, which was towards the car, minibus, electronic typewriter etc. Admittedly, such an expenditure cannot be treated as revenue expenditure. The AO has levied the penalty on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch an adjustment and also directed not to serve the copy of the assessment order without the permission of the Court. Later on, vide order dated 26.06.2004, the Hon'ble High Court quashed the intimation u/s 143(1), and finally the assessment order dated 30.03.1992 was served to the assessee in March 2004, i.e., after a gap of 12 years. Due to lapse of such a huge time, the assessee could not furnish the details of actual payment. All the particulars of the payment otherwise have been duly shown in the books of account, and therefore, the same cannot be held that such a disallowance calls for levy of penalty u/s 271(1)(c). 6.3 On the other hand, the learned Departmental Representative, strongly relied upon the order of the CIT(A) and submitted that the onus was on the assessee to show that the payment has been made by the assessee with the time prescribed so as to claim the deduction u/s 43B. 6.4 We have heard the rival submissions and also perused the relevant facts as discussed in the quantum proceedings. During the course of the assessment proceedings, the AO noted that as per the Audit Report, the claim of expenditure of Rs. 48,29,984 pertained to assessment years 1986-87 to 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion out of the total claim of Rs. 59,10,847 as the proof of payment was submitted before the AO. Other expenditures stood disallowed. The learned CIT(A) held that these expenditures have been allowed to the assessee in assessment year 1988-89, and therefore, there is no reason to allow such claim in assessment year 1989-90. The only expenditures which have been incurred in assessment year 1988-89, but qualified for consideration of allowability on the basis of payment u/s 43B will fall in assessment year 1989-90 are the following payments:- Sl. No. (as mentioned in table above) Particulars Liabilities of AY 88-89 claimed in 1989-90 on payment. 6 Cess 60,844 7 Royalty 2,21,459 9 Entry Tax 8,37,069 10 Water Cess 15,000 11 Surface rent / dead Rent 3,358 12 Electricity Duty 3,23,240 Total 14,60,970 6.6 He directed the AO to verify the payment of aforesaid liabilities, however, in the appeal giving affect proceedings, the assessee could not furnish the actual evidences of payment due to lapse of time for the reasons stated by the learned Counsel before us, and hence it was too disallowed. 6.7 It is very important to note here that the prev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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