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2016 (9) TMI 544 - ITAT MUMBAI

2016 (9) TMI 544 - ITAT MUMBAI - TMI - Penalty u/s.271(1)(c) - disallowance of business expenses - Held that:- As per the nature of the assessee’s business, following principle of commercial expediency assessee has incurred expenditure of brokerage as well as professional fees. Assessee being in the business of real estate business, professional fees are required to be incurred. Merely disallowance of such expenses will not amount to concealment of particulars by the assessee. All particulars wi .....

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ed by the assessee against the order of CIT(A), Mumbai, for the assessment year 2007-2008, in the matter of imposition of penalty u/s.271(1)(c) of the I.T.Act. 2. In this case, penalty has been imposed for disallowance of sum of the expenditure claimed by assessee in respect of brokerage and professional expenses. For this disallowance the AO has also levied penalty u/s.271(1)(c). 3. It was argued by ld. AR that assessee has furnished full particulars of expenditure so incurred and accordingly d .....

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f such property had been leased during the said year. The assessee had submitted its return of income on October 29, 2007 declaring total income at ₹ 4,70,53,140/-. In the course of assessment u/s.143(3), the AO disallowed brokerage of ₹ 61,73,200/- paid to the party who introduced back to whom property was let out. 6. During the year under consideration, the assessee decided to lease out a portion of its Bahar property which is being developed by the assessee as a part of the busine .....

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business expense towards professional fees paid for attending to all meetings, drafting and settling letter of intent, lease agreement etc. in respect of leasing of office premises. The ACIT disallowed the Appellants claim for deduction on the ground that these expenses were not related to the business of the assessee and as such it cannot be allowed as the business expenses. 7. As per the nature of the assessee s business, following principle of commercial expediency assessee has incurred expen .....

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te Developers (India)(P) Ltd., 51 SOT 411, wherein it was held that assessee has not concealed any particulars of income or furnished inaccurate particulars thereof. The question regarding allowability of certain expenses from house property was at least debatable during the relevant point of time. Accordingly, it was not a fit case for levy of penalty. Furthermore, Hon ble Bombay High Court in the case of Aditya Birla Nuvo Ltd., Income Tax Appeal No..3899 of 2010. Dated 14th August, 2012, by re .....

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ory upon the Assessing Officer to levy penalty under section 271(1)(c) jf a claim is made which is held to be unsustainable in law. The Supreme Court merely stated that willful concealment is not an essential ingredient. for attracting a civil law liability under section 271(1)(c) read with the explanation thereto. In other words, all that the judgment holds is that the concealment need not be willful to attract penalty. However to attract the provisions of section 271, the assessee must be held .....

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ew of the fact that it is an admitted position that the respondent has neither concealed any particulars of income nor furnished inaccurate particulars of income. Explanation 1(8) would apply only where an assessee has concealed the particulars of his income or has furnished inaccurate particulars of income. Explanation 1(8) provides that in such cases if the reasons given for the concealment or furnishing of inaccurate particulars of income are found to be unsubstantiated or not bona-fide, the .....

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submission. The judgment considers and interprets the judgment of the Supreme Court in Union of India & Ors. vs. Dharamendra Textile Processors & Ors. (supra). The Supreme Court after setting out Section 271 (l)(c) in paragraph 10 held as under :- "10. .......................................... A glance at this provision would suggest that in order to be covered. there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished .....

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, the word "particulars" used in Section 271(1)(c) would embrace the meaning of the details of the claim made. It is an admitted position in the present case that no information given in the return was found to be incorrect or inaccurate. It is not as if any statement made or any detail supplied was found to be factually incorrect. Hence, at least, prima facie, the assessee cannot be held guilty of furnishing inaccurate particulars. 11. The learned counsel argued that "submitting .....

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In CIT v. Atul Mohan Bindal (2009) 9 SCC 589, where this Court was considering the same provision, the Court observed that the assessing officer has to be satisfied that a person has concealed the particulars of his income or furnished inaccurate particulars of such income. This Court referred to another decision of this Court in Union of 'India v. Dharamendra Textile Processors as also the decision in Union of India v. Rajasthan Spg. & Wvg. Mills land reiterated in para 13 that: (Atul .....

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. It I was, therefore, reiterated before us that the assessing officer had correctly reached the conclusion . that since the assessee had claimed excessive deductions knowing that they are incorrect; it amounted to concealment of income. It was tried to be argued that the falsehood in accounts can take either of the two forms; (I) an item of receipt may be suppressed fraudulently; (ii) an item of expenditure may be falsely (or in an exaggerated amount) claimed, and both types attempt to reduce t .....

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ee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue. that by 'itself would not in our opinion, attract the penalty under Section 271(1) (c). If we accept the contention of the Revenue then in case of every return where the claim made is not accepted by the assessing officer for any reason. the assessee will invite penalty under Section 271(1)(c). That is clearly not the intendment of the legislature. 21. In this behalf the observations of this Co .....

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uestion of penalty is concerned the items which were not included in the turnover were found incorporated in the appellant's accounts books. Where certain items which are not included in the turnover are disclosed in the dealer's own account books and the assessing authorities include these items in the dealer's turnover disallowing the exemption penalty cannot be imposed. The penalty levied stands set aside." The situation in the present case is still better as no fault has bee .....

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