TMI Blog2020 (3) TMI 881X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ltd. [Supra] unless the case is strictly covered by the provision, the assessee cannot be exposed to penalty. In short, the penalty provision cannot be invoked unless a clear cut case is made out - making an incorrect claim by any stretch of imagination would not tantamount to furnishing inaccurate particulars. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing the inaccurate particulars. Therefore, assuming for a moment, the claim was made as revenue expenditure, but in fact, it was found to be capital expenditure that by itself would not be sufficient to arrive at the conclusion that the case is one of inaccurate particulars. - Decided against revenue. - R/TAX APPEAL NO. 109 of 2020 - - - Dated:- 25-2-2020 - MR. J.B.PARDIWALA AND MR. BHARGAV D. KARIA JJ. Appearance: MRS MAUNA M BHATT(174) WITH MR KARAN SANGHANI, ADVOCATE for the Appellant(s) No. 1 for the Opponent(s) No. 1 ORAL JUDGMENT (PER : MR.J.B.PARDIWALA) JUDGMENT 1. This tax appeal under Section 260A of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posed under section 271(1)(c) of the Act? 4. The Assessing Officer in its penalty order observed as under: It is pertinent to note here that it is settled position of law that such expenditure is of capital nature and as per provisions of Section 37 of the Act is not allowable as expenditure. There can be no ambiguity or difference of opinion so as to the treatment of such expenditure. The assessee is required to fill in the particular of amounts debited to P L A/c. To the extent disallowable u/s.37 in the return of income filed by the assessee company duly signed and verified. However, in the present case, the information filed at the relevant column by the assessee is 'nil'. The capital expenses amounting to ₹ 4,75,07,667/debited to P L A/c., being capital in nature have not been noted there by the assessee company at the relevant column in the return of income. It has been clearly laid down in the case of A.M. Shah Vs. CIT (discussed above) that Every figure in the return which is set opposite to the item of income is a particular income, whether the figure is one which is stated independently of anything else that appears in the return or the docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessee by not noting the expenses on account of software development i.e. purchase of software at Point No.7 of Para AOI of ITR6 has furnished inaccurate particulars of income. Moreover, in the said order, clear findings are being made for the levy of penalty. Thus, this order is very much in accordance with the law laid down by Hon'ble Supreme Court. In light of discussion held in para above, none of the cases cited by the assessee are applicable to the present case. Had the assessee's case not been selected for scrutiny, the assessee could have been benefited by filing inaccurate particulars of income. The assessee took chance with the department. Had the revenue not detected the inaccurate particulars of income of the assessee, the assessee could have enjoyed the fruits of filing inaccurate of particulars of income and would have caused loss to the revenue. In view of above facts and legal position discussed in para 3 (supra), the assessee is held to have furnished inaccurate particulars of income in the return of income filed by him and as per decision of Hon'ble Supreme Court in the case of Reliance Petroproduct (P) Ltd. (noted above) the liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. 6. The Tribunal while affirming the aforesaid findings recorded by the CIT(A) held as under: 6. As noted above, the CIT(A) has observed that the expenditure incurred by the assessee has a direct and proximate nexus with the existing business operations and the loss incurred was inherent in carrying on of the business. The genuineness of expenses incurred has not been doubled per se. What is the subject matter of controversy is the nature of expenditure that is whether the expenditure incurred would acquire the character of capital expenditure or a revenue expenditure. The CIT(A) has demonstrated in its order that the issue is sufficiently debatable and there is sufficient room for entertaining a different view. Needless to say, the conclusion drawn in the quantum proceedings would not automatically apply to the penalty proceedings which are distinct in character. The assessee is entitled to demonstrate its bonafide towards claim of expenditure in penalty proceedings. It is trite that every disallowance of claim cannot lead to as an automatic consequence in the form of penalty. The confirmation of addition/ disallowance in quantum proceedings is not conclusive on standa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome or furnishing of inaccurate particulars of the income of the assessee. As held by the Supreme Court in the case of Reliance Petro products Pvt. Ltd. [Supra], the meaning of the word particulars used in the Section 271(1)(c) would embrace the meaning of the details of the claim made. 9. The principal argument of Ms. Bhatt, the learned senior standing counsel appearing for the revenue is that at the time of filing of the return, the claim was made as revenue expenditure, while the Assessing Officer treated the same as the capital expenditure. According to Ms. Bhatt to this extent, the particulars furnished by the assessee could be termed as inaccurate particulars so as to attract the provisions of Section271( 1)(c) of the Act. 10. We are afraid, we are not in a position to accept the contention as canvassed on behalf of the Revenue. As held by the Supreme Court in Reliance Petroproducts Pvt. Ltd. [Supra] unless the case is strictly covered by the provision, the assessee cannot be exposed to penalty. In short, the penalty provision cannot be invoked unless a clear cut case is made out. The Supreme Court held in the said case that making an incorrect claim by any stretch ..... X X X X Extracts X X X X X X X X Extracts X X X X
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