TMI Blog2016 (8) TMI 318X X X X Extracts X X X X X X X X Extracts X X X X ..... alty u/s 271(1)(c) of the Act. Thus, on this aspect the Assessing Officer is directed to rework the amount of penalty u/s 271(1)(c) of the Act. Disallowances of balances written off - Held that:- Disallowances relates to amounts written-off by the assessee which are capital in nature. No doubt, the claim of such write-off is not tenable in the eyes of law but we find that the relevant discussion in the assessment order does not reflect any filing of inaccurate particulars or concealment by the assessee. A mere non-acceptance of a claim made in the return of income by itself does not justify the penal provisions of Sec. 271(1)(c) of the Act. As a consequence, we set-aside the order of CIT(A) on this aspect and direct the Assessing Officer to delete the levy of penalty with respect to the aforesaid addition. Dividend earned by the assessee from Saraswat Co-op. Bank - exemption in terms of Sec. 10(34) denied - Held that:- Every case of a wrong claim cannot invite penalty u/s 271(1)(c) of the Act, especially in the present case where there is no material to suggest any concealment or furnishing of inaccurate particulars of income. In fact, apart from the fact that the exemption h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld. AO has erred in levying penalty on ₹ 25,40,362/- when in fact the total disallowance comes to ₹ 13,87,996/-. 6. The Learned Commissioner of Income Tax Appeals failed to take into consideration the rectification appeal u/s 154 filed on 11.06.2014 by the appellant in connection with the addition of ₹ 38,58,300/- pertaining to difference in purchases and disallowance of balance written off to the extent of ₹ 25,40,362/-. 7. The Learned Commissioner of Income Tax Appeals erred in treating the addition of dividend income of ₹ 5,000/- as concealment of income and/or furnishing of inaccurate particulars. 3. Although assessee has raised multiple Grounds of appeal, but the solitary grievance of the assessee arises from the action of CIT(A) in sustaining penalty u/s 271(1)(c) of the Act imposed by the Assessing Officer of ₹ 21,77,000/-. 4. Before proceeding further, it would be appropriate to notice that the appellant is a company incorporated under the provisions of the Companies Act, 1956, which is engaged in the business of trading and manufacture of printing inks. For Assessment Year 2010-11, it filed a return of income dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,701/- and M/s. United Specialty Inks Pvt. Ltd. ₹ 2,79,59,501/-. The Assessing Officer noticed that the total purchases debited in the Profit and Loss account worked out to ₹ 5,22,77,902/- and, therefore, he held that the difference in the purchases reported by the assessee in the Profit Loss account and in the details furnished amounting to ₹ 38,58,300/- was undisclosed investment in purchases. Accordingly, the sum of ₹ 38,58,300/- was added to the returned income. 6. On this aspect, learned representative for the assessee pointed out that the details furnished by the assessee in the course of assessment proceedings was wrong inasmuch as the amounts credited to the account of the two parties on account of credit notes and certain receipts were not taken into consideration and, therefore, the purchases detailed at ₹ 5,61,36,202/- was erroneous. The learned representative submitted that assessee had no time to explain the discrepancy during assessment proceedings as the assessment order was finalized immediately after submission of the details, but assessee had moved an application seeking rectification of the mistake vide application dt. 5.4.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... difference in purchases, as such addition is itself unsustainable. However, as fairly put-forth by the learned representative for the assessee, the un-reconciled balance of purchases to the extent of ₹ 75,302/- would be exigible to penalty u/s 271(1)(c) of the Act. Thus, on this aspect the Assessing Officer is directed to rework the amount of penalty u/s 271(1)(c) of the Act. 9. The next addition on which penalty has been levied is a sum of ₹ 25,40,362/- representing disallowances of balances written off. In this regard, the relevant discussion is contained in para 6 of the assessment order dated 15.3.2013 ( supra ). The learned representative explained that the details of sundry balances written-off, which was furnished by the assessee, included write-off of capital assets to the tune of ₹ 12,70,181/- and capital work-in-progress to the tune of ₹ 1,17,815/-. The learned representative for the assessee pointed out that the Assessing Officer had intended to disallow the aforesaid two amounts which totals to ₹ 13,87,996/- only whereas the actual disallowance has been wrongly determined at ₹ 25,40,362/-. It has also been pointed out that if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received from a co-operative bank was not exempt in terms of Sec. 10(34) of the Act. 13. On this aspect, the learned representative for the assessee submitted that it was a clear case of an inadvertent error on the part of the assessee and not the case of any concealment or furnishing of inaccurate particulars of income. The ld. DR, on the other hand, relied upon the stand of the Assessing Officer to point out that the exemption was wrongly claimed by the assessee, and accordingly penalty u/s 271(1)(c) of the Act was sought to be justified. 14. We have considered the rival submissions and find that there is no dispute to the fact that the exemption claimed by the assessee with respect to the impugned dividend income was not in accordance with law. So however, every case of a wrong claim cannot invite penalty u/s 271(1)(c) of the Act, especially in the present case where there is no material to suggest any concealment or furnishing of inaccurate particulars of income. In fact, apart from the fact that the exemption has been denied, the discussion in the assessment order does not reveal that the assessee had filed any particulars of income which were found to be wrong or otherw ..... X X X X Extracts X X X X X X X X Extracts X X X X
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