TMI Blog2009 (4) TMI 969X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 75,93,724/- totalling to ₹ 78,85,592/-. 2.1. On receipt of the order of the CIT (A), the AO asked the assessee to explain why penalty u/s 271(1)(c) should not be levied for filing inaccurate particulars of income. It was submitted that after appeal effect to the order of the CIT (A), the assessed income is less than the returned income and therefore, no penalty u/s 271(1)(c) can be levied. It was also contended that its tax liability under the provisions of sec. 115JA on the returned income as well as on the assessed income after giving effect to the order of the CIT(A) remains the same and, therefore, it cannot be said that it has evaded the payment of any taxes. 2.3. On merits, the assessee submitted before the AO that the disallowance of foreign travel expenses was also made in the AY 1998-99 and the same was deleted by the Tribunal. Therefore, it was submitted that on this issue, no penalty can be levied. The assessee also submitted that the addition nade on account of claosing stock of consumable is made for the first time in this year rejecting the regular and consistent method of accounting followed by the asseessee for the last 25 years wherein the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, it is not entitled to deduction u/s 36(1)(xi) of the Act. The CIT (A) also observed that the assessee has failed to substantiate the explanation furnished that the explanation of the assessee is bonafide. Accordingly, he confirmed the levy of penalty on account of Y2K expenses. Now, the assessee is in appeal here before the Tribunal. 4. The learned counsel of the assesseee reiterated the contentnions raised before the lower authorities here before the Tribunal. Atttention of the Bench was dawn on the copy of the written submissions. Copies of various case laws on which reliance have been place were also enclosed alongwitht he written submissions. Attention of the Bench was also drawn on various other details i.e. order of the Tribunal for AY 2000-01, copy of the assessment order, copy of the order giving effect to the order of the CIT(A), copy of the written submission filed before the authorities below and copy of the audit report u/s 36(1)(xi) alongwith the return of income. It was also submitted that the expenditure incurred by the assessee has been treated as expenditure and depreciation has been allowed. Against the claim of ₹ 75,93,724/-, the claim of ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expert has certified that the claim is allowable u/s 36(1)(xi) of the Act and then only the assessee claimed deduction as revenue expenditure. However, the AO and the CIT(A) has treated the expenditure as capital in nature and depreciation @ 60% has been allowed on the same. This, in our considered view, is change of opinion. The order of the CIT (A) was not challenged further for the reason that there was no difference in payment of taxes for the reason that the assessed income was less than the returned income. The assessment orders as well as rectificatory orders passed after appeal effect are placed on record and it is clearly seen that the assessed income is less than the returned income. In no way it can be held that the intention of the assessee were not bonafide. 5.2. Penalty u/s 271(1)(c) of the Act is leviable in all such cases where the assessee has concealed or furnished inaccurate particulars of income. The provisions of the Act provides that opportunity has to be allowed to the assessee before levy of penalty u/s 271(1)(c) of the Act. The bonafide of the claim made by the assessee and the disallowance made in the assessment proceedings is to be gone into before pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was concealment of income with a view to avoid the tax, is on the department. The penalty is not automatic but the department has to establish a foolproof case of attracting the penalty. Merely because the addition is confirmed does not ipso facto attract the penalty provisions. In the penalty proceeding, the whole matter has to be seen in a different perspective irrespective of the fact that the addition has been confirmed by the higher authorities. 5.7. In the present case, nothing has been proved malafide on the part of the assessee. The assessee claimed revenue expenditure whereas the department treated the same as capital expenditure in nature. The tax effect is the same as the assessed income is less than the returned income. The tax paid by the assessee is on the basis of MAT system. As per MAT system, the assessed income of the assessee is ₹ 11,56,255/-. This income is after setting off of the brought forward losses. The tax payable on the assessed income after setting off of the credit of MAT paid in earlier years is nil. The MAT payable as per return of income is ₹ 15,92,083/- therefore, the tax effect is nil. Accordingly, as per the facts of the present c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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