TMI Blog2012 (12) TMI 1183X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacturing steel rollers for use of bearings. During the assessment proceedings it was noticed that the company has debited ₹ 33,27,160 as employee's training expenses on account of payment of staff account. As per the ledger account, these expenses were debited on 31st March, 2004 in the account of Shri Naveen Kansara, who is the son of Shri Navratan Kansara, managing director of the company, being related to son's study in Australia for the last five years On return to India, Shri Naveen Kansara worked with the company w.e.f 1st April, 2004. He was paid salary of ₹ 88,200 for the entire year @ ₹ 7,300 per month upto 31st March, 2004. He returned to India in the month of December, 2003 and the total expenses incur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing terms. The AO has disallowed salary to the tune of ₹ 66,150 under sec. 40A(3) (sic- 40A(2)] of the Act. 3. Accordingly penalty proceedings under sec. 271(1)(c) of the Act were initiated as the company had furnished inaccurate particulars of its income. Apparently, the assessee knowingly claimed wrong deduction on account of training expenses as well as on account of salary of managing director's son and thereby furnished inaccurate particulars of its income causing loss to the Revenue. Therefore, show-cause notice for levy of penalty under sec. 271(1)(c) of the IT Act was issued for furnishing inaccurate particulars of income. A fresh show-cause notice was also issued on 23rd March, 2010 for similar reasons. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been confirmed upto Hon'ble High Court in the quantum appeal who has held this expenditure for personal nature. 6. The assessee is aggrieved against the action of AO who issued show-cause for furnishing of inaccurate particulars of income, and imposed penalty 'on account of concealment of particular of income', and its confirmation by learned CIT(A). 7. We have heard rival submissions and have circumspected the entire record. Before we decide the controversy in appeal, we would like to analyse the provisions of sec. 271(l)(c) of the Act to the extent they are relevant for this purpose. Sec 271(1) If the AO or the CIT(A) is satisfied that any person- (a) ............... (b) has f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich were personal in nature. Moreover, for levy of penalty it is not necessary to prove the gross or wilful neglect or mala fide intention on the part of the assessee. In the case of Union of India v. Dharamendra Textile Processors [2008] 219 CTR 617/14 DTR 114/306 ITR 277 (SC), the Larger Bench-of the Supreme Court has held that 'the object behind the enactment of sec. 271(1)(c) r/w the Explanations indicated that the said section has been enacted to provide for a remedy for loss of revenue. Wilful concealment is not an essential ingredient for attracting civil liability as is the case in the matter of prosecution under sec. 276C of the IT Act.' Further, the Supreme Court in Civil Appeal No. 5769 of 2009 in the case of CIT v. Atul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticulars of income. It has claimed certain expenses to be legally allowable and learned CIT(A) has also allowed them. Therefore, there are two opinions on the allowability of these expenses. Hence, it cannot be said that the assessee has blatantly made wrong claims with a mala fide intention. The decisions realted on by the Department are on disclosed all facts. The assessee has not concealed any facts and has disclosed all facts. The non-allowance of the claim of expenses as business expenses would not and cannot terminate into a penalty under sec. 271(1)(c) of the Act. No details of expenses disclosed has been found to be incorrect. 12. In the recent decision of the Hon ble Apex Court in the case of CIT v. Reliance Petroproducts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars. Further, the Hon'ble Apex Court has laid a clear cut law while deciding the case of Anantharam Veerasinghaiah Co. v. CIT [1980] 123 ITR 457 that the findings in the assessment proceedings cannot be regarded as conclusion for the purposes of penalty proceedings. The criterion and yardsticks for imposing penalty under sec. 271(1)(c) of the Act are different from those applicable for making or for confirming additions. Therefore, it is necessary to reappreciate and reconsider the matter to see these additions/disallowances in quantum proceedings do actually repr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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