TMI Blog2018 (5) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... s Ltd. (hereinafter referred to as the assessee company ) by filing the present appeal, sought to set aside the impugned order dated 09.03.2016 passed by Ld. CIT (Appeals)-5, Delhi qua the assessment year 2011-12 on the grounds inter alia that :- 1. That on the facts and in the circumstances of case and in law, the Ld CIT-A erred in not deleting the penalty amounting to ₹ 52,83,477/- u/s 271 (l)(c) where notice u/s 274 dated 28.01.2014 is mechanical and vague and Ld CIT-A has incorrectly decided the said aspect in para 5.3.4 of impugned order. No where in the notice specific charge is pinpointed. 2. That on the facts and in the circumstances of case and in law, the Ld CIT-A erred in not deleting the penalty amounting to ₹ 52,83,477/- u/s 271(1)(c) where Ld AO has failed to mention the specific limb in which penalty is initiated and Ld CIT-A has incorrectly decided the said issue in para 5.3.5, 5.3.5.2, without considering the cited precedents in this regard. 3. That on the facts and in the circumstances of case and in law, the Ld CIT-A erred in not deleting the penalty amounting to ₹ 52,83,477/- u/s 271(1)(c) where assessee made complete factu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 100% u/s 271(1)(c) of the Act. 3. Assessee company carried the matter by way of an appeal before the ld. CIT (A) who has confirmed the penalty after dismissing the appeal. Feeling aggrieved, the assessee company has come up before the Tribunal by way of filing the present appeal. 4. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. 5. Undisputedly, penalty of ₹ 52,83,477/- has been imposed u/s 271(1)(c) of the Act primarily on account of addition/disallowance of ₹ 1,53,85,320/- debited by the assessee company under the head Impairment of assets and addition/disallowance of ₹ 1,58,891/- on account of short fall of the bank guarantee. It is also not in dispute that the quantum has been accepted by the assessee company. 6. In the backdrop of the aforesaid facts and circumstances of the case, order passed by the lower Revenue authorities and arguments addressed by the ld. AR to the parties, the sole question arises for determination in this case is:- as to whether the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x, Circle 4 (1), Room No.318-A, C.R. Building, New Delhi. 10. Undisputedly, additions made against the assessee during quantum proceedings have already been confirmed. It is settled principle of law that the penalty cannot be imposed merely on the ground that additions made in the income of the assessee has been confirmed rather to proceed with imposition of penalty u/s 271(1)(c), the AO has to prove that there was concealment of particulars of income or assessee has furnished inaccurate particulars of such income. 11. Bare perusal of the notice issued to the assessee u/s 271(1)(c) of the Act reproduced above goes to prove that assessee has not been called upon to explain if he has concealed the particulars of income or furnished inaccurate particulars of such income rather a tick has been marked against both the charges mentioned in the printed proforma. Hon ble Karnataka High Court in case of CIT vs. Manjunatha Cotton and Ginning Factory Ors. (supra) dealt with the identical issue threadbare and came to the following conclusion :- 63. In the light of what is stated above, what emerges is as under: a) Penalty under Section 271(1)(c) is a civi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be imposed. n) The direction referred to in Explanation IB to Section 271 of the Act should be clear and without any ambiguity. o) If the Assessing Officer has not recorded any satisfaction or has not issued any direction to initiate penalty proceedings, in appeal, if the appellate authority records satisfaction, then the penalty proceedings have to be initiated by the appellate authority and not the Assessing Authority. p) Notice under Section 274 of the Act should specifically state the grounds mentioned in Section 271(1)(c), i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income q) Sending printed form where all the ground mentioned in Section 271 are mentioned would not satisfy requirement of law. r) The assessee should know the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended. On the basis of such proceedings, no penalty could be imposed to the assessee. s) Taking up of penalty proceedings on one limb and finding the assessee guilty of another limb is bad in law. t) The penalty proceedings are distinct from the assessment proceedings. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the future. Since the assets were earlier used in the business purposes and the Accounting Standard 28 as applicable in India also provides that any assets which has higher carrying value than the book value should be impaired to the extent of difference in value which is an allowable expenditure. On analysis of market value of the goods held for disposal, the management of the company had decided to write off the balance 18% value of the earlier impaired goods, there being no realizable value since the goods had become obsolete and was neither saleable in the market nor were carrying any market value. In view of the above the impairment of assets is allowable as business expenditure. 14. Bare perusal of the aforesaid explanation furnished by the assessee company goes to prove that the assessee company has come up with bonafide claim with no actual or conscious concealment on its part. 15. Hon ble Delhi High Court in case cited as CIT vs. IFCI Limited (2010) 328 ITR 611 (Delhi) held that in case, any claim made by the assessee has not been accepted it would not per se tantamount to furnishing any account of inaccurate particulars to attract the penalty proceedings u/s 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iculars used in section 271(1)(c) would embrace the detail 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 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 erroneous. Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccura ..... 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