TMI Blog2016 (12) TMI 554X X X X Extracts X X X X X X X X Extracts X X X X ..... n which the accounts are maintained by the assessee , the mandate for levying of penalty u/s 271(1)(c) of the Act is not fulfilled more-so it was the contention of the assessee that no expenditure has been incurred by the assessee in relation to earning of exempt income which does not form part of the total income . The contention of the assessee was that no expenditure was incurred by the assessee for earning of exempt income and it was all the more incumbent on the authorities below to have identify and ascertained the expenditure incurred by the assessee in relation to earning of exempt income having regard to the accounts of the assessee, which exercise to ascertain disallowance having regard to the accounts of the assessee was unfo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in confirming the penalty imposed by the Assessing Officer u/s 271(1)(c) of the Income Tax Act,1961 amounting to ₹ 1,59,130/- on the disallowance on account of Rule 8D r.w.s. 14A. 3. The Brief facts of the case are that the assessee is engaged in business of shipping agent, derivative trading transport and logistics activities. During quantum assessment proceedings u/s 143(3) read with Section 143(2) of the Act, the AO observed that the assessee has earned income which does not form part of total income , while the assessee has not disallowed expenditure incurred in relation to earning of income which does not form part of total income. The assessee was asked to explain the same and the assessee in reply submitted as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see u/s 271(1)(c) of the Act by the AO vide penalty orders dated 28.06.2012 passed by the AO for furnishing of inaccurate particulars of income in the return of income filed by the assessee with the Revenue. During the penalty proceedings , the assessee submitted before the AO that three is no concealment of particulars of income nor the assessee filed inaccurate particulars of income in the return of income filed with the Revenue .The assessee submitted that no expenditure has been incurred by the assessee to earn exempt income but the assessee during assessment proceedings accepted voluntarily disallowance of expenditure incurred to earn exempt income in accordance with Section 14A of the Act read with Rule 8D of Income Tax Rules, 1962 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions as stipulated u/s 271(1)(c) of the Act. The above contentions were rejected by the AO and it was held that the assessee has furnished inaccurate particulars of income and penalty of ₹ 1,59,130/- was levied by the AO on the assessee u/s 271(1)(c) of the Act and more so the AO observed that the assessee did not file any appeal against quantum assessment order u/s 143(3) of the Act wherein the additions made by the AO u/s 14A of the Act read with Rule 8D(2)(iii) of Income Tax Rules, 1962 were accepted by the assessee which attained finality. The AO also relied on several case laws as mentioned in the penalty order u/s 271(1)(c) of the Act, while levying penalty u/s 271(1)(c) of the Act vide orders dated 28-06- 2012 and also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee when the appeal was called for hearing. The learned DR relied on the orders of the authorities below. 7. We have heard the learned DR and gone through the orders of the authorities below including case laws referred to in the orders of the authorities below. The assessee earned exempt income while did not disallow the expenditure incurred in relation to the earning of the exempt income as mandated u/s 14A of the Act. The assessee claimed that no expenditure was incurred in relation to the earning of exempt income . The assessee on being asked to show cause as to why no expenditure was disallowed which was incurred in relation to the earning of income which does not form part of total income, came forward with voluntary disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relation to the earning of exempt income before invoking Rule 8D of Income Tax Rules, 1962 read with Section 14A of the Act. The assessee accepted the assessment order passed by the AO u/s 143(3) of the Act whereby no appeal was filed by the assessee against the addition of ₹ 4,68,166/- made by the AO u/s 14A of the Act read with Rule 8D of Income Tax Rules, 1962 but that itself is not sufficient to fasten assessee with liability under penalty provisions as contained u/s 271(1)(c) of the Act without satisfying the mandate of Section 271(1)(c) of the Act. Under the peculiar facts and circumstances of the case as detailed above, in our considered view, the action of the AO in making disallowance of expenditure incurred by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
