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2016 (6) TMI 845 - PUNJAB & HARYANA HIGH COURT

2016 (6) TMI 845 - PUNJAB & HARYANA HIGH COURT - [2016] 386 ITR 316 - Levy of penalty under Section 271(1)(c) - disallowance on account of capitalization of interest related to capital work in progress under Section 36(i)(iii) - ITAT deleted penalty - Held that:- Tribunal held that the disallowance on account of capitalization of interest related to capital work in progress under Section 36(1)(iii) of the Act, the Distillery Division of the assessee had already started functioning and since the .....

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n of this provision had not been settled finally, therefore, no penalty under Section 271(1)(c) of the Act was exigible. Equally the disallowance on account of repair and maintenance under Section 40(a)(ia) of the Act was made on estimate basis and finally the disallowance had been restricted by the Tribunal at ₹ 1 lac during quantum proceedings. - Regarding deletion of penalty by the CIT(A) on addition made on account of deferred tax computed on book profits under Section 115JB of the .....

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e Petroproducts (P) Limited (2010 (3) TMI 80 - SUPREME COURT) the Apex Court had held that under Section 271(1)(c) of the Act, there has to be concealment of income of the assessee or the assessee must have furnished inaccurate particulars of his income. In the present case, the claim made by the assessee has not been shown to be suffering from any of these conditions. In the absence of any finding recorded by the CIT(A) or the Tribunal with regard to the claim of the assessee that it was malafi .....

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rh Bench B , Chandigarh (hereinafter referred to as the Tribunal ) in ITA No. 964/CHD/2014, for the assessment year 2007-08, claiming the following substantial questions of law:- i) Whether the Hon'ble ITAT is right in law in upholding the decision of the CIT(A) deleting the penalty levied by relying upon the decision of Reliance Petro Products, when the issue was clearly covered by the decision of the Hon'ble Delhi High Court in the case of CIT vs. Zoom Communication (P) Ltd. (2010) 327 .....

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x liability from the books profits and tax liability u/s 115JB was maliciously reduced when such amount was never credited in the P&L Account? 2. Put shortly, the facts necessary for adjudication of the instant appeal as narrated therein may be noticed. The assessee filed its return of income on 30.10.2007 declaring nil income. The case was selected in scrutiny and the Assessing Officer vide assessment order dated 13.11.2009 (Annexure P-1) under Section 143(3) of the Act made the following a .....

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ides charging interest under Sections 234B, 234C and 234D of the Act, proceedings for levy of penalty under Section 271(1)(c) of the Act were also initiated. 3. Feeling aggrieved by the aforesaid assessment order, Annexure A-1, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [for brevity the CIT(A) ]. The CIT(A) vide order dated 1.3.2011 confirmed the additions mentioned at Sr. No. (ii) to (v) and deleted the addition mentioned at Sr. No.(i) above. Against the order .....

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.2013 (Annexure A-3) imposed penalty amounting to ₹ 1,10,78,245/- under Section 271(1)(c) of the Act on the issues confirmed by the CIT(A). The assessee assailed the order, Annexure A- 3, passed by the Assessing Officer before the CIT(A) who vide order dated 13.8.2014 (Annexure A-4) deleted the said penalty imposed under Section 271(1)(c) of the Act. The order, Annexure A-4, was challenged by the revenue in appeal before the Tribunal. The Tribunal vide order dated 6.2.2015 (Annexure A-5) c .....

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nder Section 36(1)(iii) amounting to ₹ 2,38,74,691/-; (ii) disallowance under Section 14A of the Act amounting to ₹ 27,562/-; (iii) addition on account of building repair and maintenance expenses amounting to ₹ 16,14,610/-; (iv) addition on account of deferred tax amounting to ₹ 2,21,86,000/- to the book profit under Section 115JB of the Act. 6. It would be apposite to refer to the findings recorded by the CIT(A) while cancelling the penalty under Section 271(1)(c) of the .....

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loans and cash flow statement and also that the manner in which the interest was capitalized had not been provided. The disallowance has been made by the Assessing Officer on proportionate/estimated basis and for non furnishing of certain details. The appellant had not concealed any particulars of its income or had not furnished inaccurate particulars and so the concealment penalty on such disallowance could not be levied in view of the judgment of the Hon'ble Supreme Court in Commissioner o .....

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of the Act. The appellant had not concealed particulars of its income or had not furnished inaccurate particulars and so penalty for concealment cannot be levied on such disallowance in view of the judgment of the Hon'ble Supreme Court in Commissioner of Income Tax v. Reliance Petroproducts Ltd. (2010) 322 ITR 158 (SC). Concealment penalty levied on this issue is accordingly cancelled. Ground of appeal No.3 is allowed. 8. Regarding levy of penalty on the disallowance on account of repair and .....

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uilding was made on estimated basis to restrict the expenses on current repairs of the building and this was done as per the directions of Hon'ble ITAT in A.Y. 2004-05. The disallowance is purely an estimate and so penalty for concealment cannot be levied in view of the judgment of Hon'ble Punjab and Haryana High Court in the case of Harigopal Singh (258 ITR 85). The penalty for concealment levied on this issue is accordingly cancelled. Ground of appeal No.4 is allowed. 9. Examining the .....

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Finance Act, 2008, but with retrospective effect from 01.04.2001 and so the appellant could not have known before filing the return of income of the year in question i.e. A.Y. 2007-08 that deferred tax liability was not to be reduced for the purposes of calculation of book profit, if it was not credited to the profit and loss account. Therefore, the Assessing Officer was not right in levying the penalty under Section 271(1)(c) on this disallowance made in calculation of book profit and so the p .....

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eady started functioning and since the details of funds utilized for individual projects were not reconcilable, the assessee had agreed for disallowance of proportionate interest for which the assessee cannot be held liable for either concealing particulars of income or furnishing inaccurate particulars of income. Similarly, though the issue of disallowance of proportionate interest under Section 14A of the Act was not agitated before the Tribunal due to smallness of amount of ₹ 27,562/- b .....

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