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Indigo Jewellery (India) Mfg. Pvt. Ltd. Versus The Income –tax Officer 8 (2) (1) , Mumbai

2016 (6) TMI 209 - ITAT MUMBAI

Penalty under section 271(1)(c) - difference between the reported and the assessed income - inadvertent mistake - exchange rate difference on repayment of Term loan capitalized to the cost of assets in terms of section 43A of the Act not added back to the total income - Held that:- Ostensibly, in all cases where there is a difference between the reported and the assessed income, penalty under section 271(1)(c) of the Act cannot be justified. As because there is a difference between the reported .....

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& Loss Account. The circumstances explained by the assessee, which have not been doubted by the Revenue, clearly establish that it is a case of an inadvertent mistake and not a deliberate attempt to conceal the income or furnish inaccurate particulars of income within the meaning of section 271(1)(c) of the Act. The judgment of the Hon’ble Bombay High Court in the case of Bennett Coleman & Co. Ltd.(2013 (3) TMI 373 - BOMBAY HIGH COURT) clearly supports the stand of the appellant that an inadver .....

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Appellant : Shri Sanjay Parikh For the Respondent : Shri Bhanwar Singh Ratnoo ORDER Per G. S. Pannu, AM The captioned appeal filed by the assessee pertaining to the A.Y. 2009-10 is directed against an order passed by Ld. CIT(A)-17, Mumbai dated 29.04.2013, which in turn arises out of an order passed by Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961 ( in short the Act ) dated 25.05.2012. 2. In this appeal, the solitary grievance of the assessee is against the action of the .....

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the Act dated 24/11/2011, whereby the loss was assessed at ₹ 10,06,419/-. The difference between the reported and the assessed loss was on account of disallowance of ₹ 13,70,387/-, representing exchange rate difference on repayment of Term loan capitalized to the cost of assets. Subsequently, the Assessing Officer held the assessee guilty under section 271(1)(c) of the Act on the aforesaid disallowance on the ground that it represented concealment or furnishing of inaccurate particul .....

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income. Explaining the background, Ld. Representative for the assessee pointed out that during the year under consideration, assessee company had converted its liability in foreign currency loan applying the year-end exchange rate of ₹ 1,63,12,047/- and it had incurred exchange rate difference on repayment of foreign currency loan amounting to ₹ 13,70,387/- cumulatively amounting to ₹ 1,76,82,434/-. The entire amount was charged to Profit & Loss Account, following Accountin .....

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s not benefitted at all from such claim as the net income was a figure of loss. Moreover, the loss has been carried forward and setoff against profits in the subsequent year and only on the balance of such profits assessee had claimed deduction under section 10AA of the Act in the subsequent year. It was, therefore, contended that it was a mere inadvertent mistake and such an error does not give rise to penalty under section 271(1)(c) of the Act. In support, reliance has been placed on the decis .....

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