TMI Blog2016 (11) TMI 355X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the audited accounts and complete disclosure was made in notes to accounts and full explanation was furnished during the assessment proceedings and the explanation furnished are found to be bonafide. Also during the period the director of the company was under arrest and the company did not have any qualified persons to compile the return as per law and, therefore, even the interest written back credited to the profit and loss account was not withdrawn in spite of the clear mandate of section 41 (1) of the Act that such written back was not taxable - Decided in favour of assessee - ITA No. 946/Del/2013 - - - Dated:- 20-9-2016 - SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER Appellant by : Sh. Sanjay Kapoor, FCA Respondent by : Ms. Deepika Mittal, CIT(DR) ORDER PER O.P. KANT, A.M. This appeal by the assessee is directed against order dated 21/01/2013 of learned Commissioner of Income-tax (Appeals) for assessment year 2001-02, wherein he has sustained the penalty levied under section 271(1)(c) of the Income-tax Act, 1961 by the Assessing Officer. The grounds of appeal raised by the assessee are as under: i. The provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee was enhanced. In view of the facts, though the Assessing Officer made additions/disallowances, the withdrawal of the income offered under section 41(1) of the Act at the time of filing return, resulted in enhancement of the loss, as compared to the returned loss. The case reached to the Tribunal for adjudication. The Tribunal set aside the orders of the lower authorities and directed the Assessing Officer to reassess the income. In the re-assessment order, the Assessing Officer retained the addition already made by the earlier Assessing Officer and made further addition of ₹ 1,02,85,876/- and initiated penalty proceedings under section 271(1)(C) of the Act. Before the Assessing Officer, the assessee pleaded that assessed loss was higher than the loss as returned, thus, it was evident that assessee company did not make any attempt to evade tax, which is a prerequisite for levy of penalty under 271(1)(c) of the Act. Further, the assessee submitted that penalty under section 271(1)(c) is leviable only if the assessee has sought to evade tax by filing inaccurate particulars of income or concealed the income and in the facts and circumstances of the assessee, no penalty was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income was filed. In view of above facts, the learned counsel requested that the penalty levied might be deleted. 4. The learned Senior Departmental Representative, on the other hand, relied on the findings of the lower authorities. 5. We have heard the rival submissions and perused the material on record including the order of the lower authorities. From the orders of the lower authorities, we find that the assessee filed return of income declaring loss, however, the Assessing Officer made certain additions/disallowances to the returned loss and simultaneously also withdrawn the income offered by the assessee under section 41(1) of the Act. The Assessing Officer levied penalty in respect of additions/disallowances made in the assessment order. The Assessing Officer has made following additions/disallowances: 1. Interest due to bank ₹ 19,71,86,237/- 2. interest disallowances on loan from IAFBF ₹ 36,00,000/- 3. loss on machinery ₹ 3,29,27,354/- 4. bad debts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case mentioned in the submissions before the Assessing Officer in proceedings under section 254/143 (3) of the Act that during the period the director of the company was under arrest and the company did not have any qualified persons to compile the return as per law and, therefore, even the interest written back credited to the profit and loss account was not withdrawn in spite of the clear mandate of section 41 (1) of the Act that such written back was not taxable. We find that the assessee has disclosed all facts regarding interest and other claims in the audited accounts and complete disclosure was made in notes to accounts and full explanation was furnished during the assessment proceedings and the explanation furnished are found to be bonafide. 8. We find that in the case of Commissioner of Income Tax, Ahmedabad Vs. Reliance Petroproducts (P) Ltd, 322 ITR 158 (SC), Apex Court has held that when the detail supplied by assessee are not found to be incorrect or erroneous or false there were no question of inviting penalty under section 271(1)(c) of the Act. The relevant findings of the Hon ble Supreme Court are reproduced as under: 9. We are not concerned in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up to the authorities to accept its claim in the Return or not. Merely because the assessee 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 Assessing Officer for any reason, the assessee will invite penalty under Section 271(1)(c). That is clearly not the intendment of the Legislature. 9. Thus, the Hon ble Supreme Court has held that where the assessee has furnished all the details of its expenditure as well as income in its return, which in themselves were not found to be inaccurate, nor could be viewed as concealment of income on its part and merely because the assessee had claimed the expenditure, which has not been accepted by the Revenue cannot lead to levy of penalty under section 271(1)(c) of the Act. 10. In view of our discussion above, respectfully following the decision in the case of Reliance Petroproducts Private Limited (supra), we hold that no penalty under section 271(1)(c) of the Act is leviable in respect of a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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