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2015 (10) TMI 2301 - ITAT MUMBAI

2015 (10) TMI 2301 - ITAT MUMBAI - TMI - Penalty u/s.271(1)(c) - disallowance under the head payment made by the Branch Office to the Head Office (HO) - Held that:- The prime factors required to be considered while imposing penalty under section 271(1)(c) are concealment of particulars of income or submission of inaccurate particulars of such income. There is no dispute that the assessee had disclosed all details about its HO Expenses and therefore it could not be treated as concealment of parti .....

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acceptable, notwithstanding addition made by treating the amount as income from undisclosed sources penalty may not be levied. Also see NG Technologies Ltd. [2014 (12) TMI 481 - DELHI HIGH COURT] - Decided in favour of assessee. - ITA No. 6663/Mum/2010 - Dated:- 23-9-2015 - Rajendra, AM And Sanjay Garg, JM For the Petitioner : Shri K K Ved For the Respondent : Shri Raghuveer Madnappa ORDER Per Rajendra, AM Challenging the order,dated 15.06.2010, of the CIT(A)-10, Mumbai the Assessing Officer (AO .....

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d in the business of financing diamond-trade, filed its return of income on, 30.10.2005, declaring a total income of ₹ 21.91 Crores. The AO completed the assessment on, 28.12.2007, determining the total income of the assessee at ₹ 23.87 Crores. 2. Effective ground of appeal deals with deletion of penalty imposed by the AO u/s.271(1)(c) of the Act. While completing the assessment the AO made a disallowance of ₹ 88,56,354/- under the head payment made by the Branch Office to the .....

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sessee had claimed a provision of deduction for the general administrative expenditure in accordance with section 44C of the Act, that a portion of the expenditure was suo moto not claimed while filing the return, that in earlier years the then FAA has allowed the HO expenditure, that there was difference of opinion about the nature of expenditure incurred between the AO and the assessee, that it was under bonafide belief that the expenditure was allowable, that it had not concealed the particul .....

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by it were factually wrong, that the AO and the assessee were having different opinion about a particular item of expenditure, that in earlier years HO expenses were allowed in appellate proceedings, that in the succeeding year DRP has directed the AO to allow the HO expenditure as per the provisions of section 44C of the Act. He referred to the matter of Haryana Ware Housing Corporation - ( 2009-TIOL-332-HC-P&H-IT ) , Kanbay Software India Pvt.Ltd. (22 DTR 481) and held that in the case und .....

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sed. 2.2. During the course of hearing, before us, the Departmental Representative (DR) supported the order of the AO. The Authorised Representative (AR) contended that the addition upheld by the FAA for the year under consideration with regard to HO expenses was restored back to the file of the FAA by the Tribunal vide its order dated 04.09.2013 (ITA No.1798/Mum/2009) , that the FAA had rightly deleted the penalty. He referred to the order of the Tribunal delivered in the case of National Secur .....

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HO expensess to the file of the FAA for fresh adjudication, that the penalty imposed by the AO was deleted by the FAA. From the above it is clear that the issue is debatable and that the assessee has disclosed everything while filing the return of income. Genuineness of incurring of expenditure is not in doubt. The AO and the assessee have different views as to whether the expenditure claimed by the assessee could be allowed or not. In our opinion, disallowance of any claim does not and should n .....

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inaccurate particulars of such income. There is no dispute that the assessee had disclosed all details about its HO Expenses and therefore it could not be treated as concealment of particulars of its income or furnishing inaccurate particulars of income. We also hold that as long as there was a possibility to understand the provision in different ways and the assessee had chosen one, the occasion to invoke section 271 did not arise. In the matter of Jugalkishore Hargopal Das (243 ITR 220), Hon&# .....

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a is not a necessary attribute to impose penalty under section 271(1)(c) of the Income-tax Act, 1961. Penalty under section 271(1)(c) is imposed as a civil liability / obligation. The provision is both remedial and coercive in nature. It is far different from and unlike any penalty for a crime or a fine or forfeiture imposed under the criminal and penal laws. Penalty under section 271(1)(c) refers to blameworthy conduct for contravention of the Act and it equally applies to tax delinquency cases .....

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