TMI Blog2017 (2) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... e or filed in accurate particulars of income. Mere making a claim of expenses in the profit and loss account in a case where the accounts of the assessee were audited and also accounts were prepared under professional guidance and advice would not automatically lead to inference that assessee is liable to the penal action u.s 271(1)(c) of the Act. A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Therefore, in our opinion the ld.CIT(A) has rightly deleted the penalty imposed by the AO after taking into account the contentions put forth by the assessee vis-a-vis the provisions of the Act by relying on the ratio in the decision of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vember 2004 and declared nil receipts/sales in the profit and loss account. The AO finally framed the assessment u/s 143(3) of the Act on 24.12.2009 assessing the total income at ₹ 23,99,342/- by disallowing all the expenses and making additions on account of house property of ₹ 6,68,000/-,depreciation of ₹ 2,67,93,247/-, Manufacturing expenses of ₹ 46,31,654/,Interest Financial charges of ₹ 2,27,20,949/- and written off deferred revenue expenses of ₹ 3,18,938/ - and also treating the Interest on I.T.refund of ₹ 14,38,549/- and the bank interest ₹ 13,753/- as income from other sources as against the business shown by the assessee when the assessee failed to produce the books of account and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings as well as the written submissions made are considered. On a perusal of the penalty order, it is seen that the AO has merely relied upon the order of the CIT(A), although the appeal was dismissed on technical grounds. Penalty proceedings are separate proceedings, which provide the requisite opportunity and authority for the AO to investigate into the issues on which additions were made. During the penalty proceedings, the AO is empowered to bring on record any materials which support the view that the appellant had concealed the income or furnished inaccurate particulars of income. It is seen from the penalty order that the AO has not brought on record any such materials which indicate that the appellant had furnished inaccurat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, the assessee must have furnished inaccurate particulars of his income. The meaning of the word particulars'' used in section 271(1)(c) would embrace the details of the claim made. Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tantamount to furnishing inaccurate particulars. There can be no dispute that everything would depend upon the return filed by the assessee, because that is the only document where the assessee can furnish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FAA sustained the order of assessment passed by the AO. The ld. DR finally prayed that the order of the ld.CIT(A) be set aside and that of AO be confirmed. 6. On the other hand, the ld.AR submitted before us that the all the items of expenses and income as were disallowed in the assessment order were fully disclosed by the assessee in its annual accounts filed along with the return of income filed by the assessee and thus all the details regarding additions were available before the AO. Simply because the assessee did not challenge the appellate order of FAA confirming the various additions in assessment order should not be taken to mean that the assessee has concealed particulars of income or furnished in accurate particulars of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d thereafter no further appeal was filed before the tribunal and the thus assessment so framed attained finality. We also note that all the additions were made by the AO on the basis of audited annual accounts filed by the assessee with the return of income by disallowing all the expenses charged to the profit and loss account. After dismissal of quantum appeal by the FAA, the AO mechanically levied penalty without recording any findings that as to how the assessee has concealed the income or filed in accurate particulars of income. Mere making a claim of expenses in the profit and loss account in a case where the accounts of the assessee were audited and also accounts were prepared under professional guidance and advice would not automatic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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