TMI Blog2017 (12) TMI 1522X X X X Extracts X X X X X X X X Extracts X X X X ..... etails were filed by the assessee during the course of assessment proceedings against which the Assessing Officer has not made any adverse observation. It is also undisputed that the amount of expenditure claimed on ESOP was duly reflected in the P&L account and also in the notes to accounts. Therefore, we are of the considered opinion that penalty will not be leviable on this issue as mere making of a claim, which is not otherwise acceptable in law, will not tantamount to concealment of income or furnishing inaccurate particulars, especially when the bona fides of the assessee are not under doubt. - Decided in favour of assessee. - ITA No. 1577/Del/2014 - - - Dated:- 1-11-2017 - SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI PRASHA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure and a notional contingent liability. The Ld. CIT (A) also confirmed the disallowance of ₹ 34,53,218/- on account of disallowance u/s 14A. 2.2 On the assessee approaching the ITAT, the ITAT held that entertainment subsidy was a capital and not a revenue receipt. The ITAT also held that ESOP could not be allowed as a deduction without actually paying it to the employees and the issue of disallowance u/s 14A was set aside to the file of the Assessing Officer. 2.3 Subsequently, the Assessing Officer initiated penalty proceedings u/s 271(1)(c) and levied penalty of ₹ 31,34,639/- on account of disallowance of depreciation of ₹ 23,04,466/- on the amount of entertainment subsidy and on ₹ 70,08,183/- disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cedents and submitted that the order of the Ld. CIT (A) be upheld. 5. We have heard the rival submissions and perused the material available on record. As far as penalty on addition of ₹ 23,04,466/- in respect of entertainment subsidy is concerned, the ITAT has deleted the entire quantum in the quantum appeal and thus, we agree with the Ld. CIT(A) that no penalty is leviable on the same as quantum addition itself has been deleted. 5.1 As far as the second issue relating to disallowance of ₹ 70,08,183/- on account of ESOP expenditure is concerned, it is undisputed that accounts of the assessee were duly audited, tax audit report, computation of income and income tax return were not at variance and relevant details were file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said that the assessee had withheld any relevant information regarding its receipts and income from the AO. With regard to the provisions of section 271 (1) (c) of the Act pertaining to penalty, the Hon ble Apex court has laid down that making of a claim by the assessee which is not sustainable will not amount to furnishing inaccurate particulars. In the case of CIT versus Reliance Petroproducts (P) Ltd reported in 322 ITR 158 (SC), the Hon ble Apex Court held as follows 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 inaccurate particulars of his income. The present is not a case of concea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... served 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 versus Dharamendra Textile Processors (2008) 13 SCC 369 as also, the decision in Union of India versus Rajasthan Spg. Wvg. Mills (2009) 13 SCC 448 and reiterated in paragraph 13 that (page 13 of 317 ITR): 13. It goes without saying that for applicability of section 271 (1) (c), conditions stated therein must exist. 5.3 Therefore, we find no reason to interfere with the order of the Ld. CIT (A) on this issue also and we uphold the same. 6. In the result, the appeal filed by the department i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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