TMI Blog2018 (3) TMI 1342X X X X Extracts X X X X X X X X Extracts X X X X ..... t any statement made or any details supplied were found to be factually incorrect. Therefore, it cannot be held guilty of furnishing inaccurate particulars of income. We find that in its case there is no finding that any details supplied by the assessee were found to be incorrect or erroneous or false. Such not being the case, the assessee cannot be put to question for levying the penalty u/s 271(1)(c)(1)(c) - Decided in favour of assessee. - ITA No. 5950/Mum/2016 - - - Dated:- 21-3-2018 - Sri Mahavir Singh, JM And Sri G. Manjunatha, AM Revenue by : Ram Tiwari, AR Assessee by : Madhur Agarwal, AR ORDER Per Mahavir Singh, JM This appeal by the revenue is arising out of the order of Commissioner of Income Tax-14, Mumbai [in short CIT(A)], in appeal No. CIT(A)-14/IT-345AB/13-14 dated 29.07.2016. The original Assessment was framed by the Asst Commissioner of Income Tax, Circle-7(2), Mumbai (in short ACIT ) for the A.Y. 2008-09 vide order dated 20-12-20101 under section 143(3) of the Income Tax Act, 1961 (hereinafter the Act ). The reassessment was framed by DCIT, Circle-7(2) Mumbai under section 143(3) r.w.s 147 of the Act vide order dated 04-12-2012 for AY 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee furnished inaccurate particulars by claiming that this is an allowable deduction and was a ploy to hide the correct nature of transaction and its taxability as per the Income Tax Act, 1961. Therefore, I have no doubt in my mind that this is a case which is a fit case for imposition of penalty. Aggrieved, assessee preferred appeal before CIT(A). 5. The CIT(A) deleted the penalty levied by the AO by observing as under:- 3.4 As regards the other grounds, I have considered the submissions made by the appellant. The materials and facts relating to the issue under consideration was clearly disclosed in the Audited Financial Statement. The claim of leave encashment was based on actuarial valuation report while claim for deduction was based on the basis of actual payment made. The Tax Auditor have duly certified the liability as allowable. These facts are duly mentioned by the AO in para 3 of the penalty order. The issue is directly covered by the decision in the case of Rama Newspaper and Paper Ltd Vs DCIT ITA No. 6087/Mum/2012 dated 5/11/2014 in A.Y 2007-08. In this case the Hon'ble Jurisdictional ITAT observed that the claim of provision for leave encashment is ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and credited to leave encashment expenditure account in Annexure No.4 to Form 3CD annexed to the audit report furnished u/s.44AB of the Act The above claim was based on the actuarial valuation report obtained as on 31.03.2008 whereby the leave encashment liability which had accrued on 31.03.2008 is determined at ₹ 3,00,09,000/-. Accordingly, provision for the liability was created in the Books of accounts on 31.03.2008 for ₹ 3,00,09,000/--. Thus, the assessee had made full and complete disclosure of the claim for leave encashment. In-fact the AO himself allowed this claim in the subsequent year i.e. A Y 2009-10. Therefore, it has not kept away anything from the AO, which he found during the reassessment proceeding which could justify that there was any concealment or furnishing of inaccurate particulars of income. All the materials are clearly demonstrated in audited financial statements only. It is also worth mentioning here again that the books of accounts of the assessee are duly audited and there is no qualification in the Auditors Report of the Auditor to the effect that the assessee has followed improper accounting to record its transaction. 8. We find from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same are not allowable u/s.43B of the Act in the year under consideration and the same shall be allowed in the subsequent year. In such circumstances, we are of the view that when the expenses are otherwise genuine and allowable but disallowed only due to dispute with respect to year of allowability of the claim, then, in such circumstances no penalty u/s 271(1)(c) can be levied. We have also considered the plea of the Ld Sr DR that the claim made by assessee is wrong. We are of the view that mere making of the claim, which is not allowed by the AO by itself will not amount to furnishing of inaccurate particulars regarding the income of the assessee and merely because the assessee's claim for deduction has not been accepted and allowed in the year under consideration but allowed in the subsequent year penalty u/s 271(1)(c) cannot be attracted. We are of the view that the impugned disallowance of expenses was made by the AO on the ground that the same were not allowable in the year under consideration but allowable in the subsequent year as per the provision of section 43B of the act, it clearly shows that the dispute was only relating to the year in which the said expenses are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not as if any statement made or any detail supplied was found to be factually incorrect. Hence, at least, prima facie, the assessee could not be held guilty of furnishing inaccurate particulars. The revenue argued that submitting an incorrect claim in law for the expenditure on interest would amount to giving inaccurate particulars of such income. Such cannot be the interpretation of the concerned words. The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing of inaccurate particulars. Therefore, it must be shown that the conditions under section 271(1)(c ) exist before the penalty is imposed. There can be no dispute that everything would depend upon the return filed, because that is the only document, where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. To attract penalty, the details supplied in the return must not be accurate, not exact or correct not according to the truth or errone ..... X X X X Extracts X X X X X X X X Extracts X X X X
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