TMI Blog2021 (5) TMI 428X X X X Extracts X X X X X X X X Extracts X X X X ..... capital or revenue in nature are always debatable issue. Therefore, though the assessee has claimed the capital expenditure as revenue expenditure that itself is not sufficient to levy penalty. The non-acceptance of the claim of the assessee cannot tantamount to furnishing of inaccurate particulars warranting levy of penalty as has been held by the Hon ble Supreme Court in the case of CIT v. Reliance Petroproducts Pvt. Ltd.. [ 2010 (3) TMI 80 - SUPREME COURT] The considerations for imposition of penalty under section 271(1)(c) of the Act are however entirely different. It requires existence of mens rea on the part of the assessee and either of the twin conditions of (i) concealment of income or (ii) filing of inaccurate particulars by the assessee, are required to be satisfied and the burden of proving that lies upon the revenue authority and not on the assessee. Merely because the claim of expenditure made by the assessee was found to be a wrong claim and is disallowed, it does not per se attract imposition of penalty under section 271(1)(c) of the Act. Just because the assessee has not preferred further appeal before the appellate authority against the quantum addition that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2021) 430 ITR 259 (Mad). On the other hand, the ld. DR vehemently argued that the above case law relied on by the ld. Counsel has no application since the phraseology used in response to the penalty notice by the assessee is different and strongly supported the appellate order. 5. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. Against the penalty notice under section 271(1)(c) of the Act dated 17.12.2015, vide letter dated 28.12.2015, the reply of the assessee runs to three pages and the first para is reproduced as under: We are in receipt of your notice u/s 271(1)(c) of the Income Tax Act 1961 dt. 17/12/2015 calling on us to show cause why an order u/s 271(1)(c) of the Income Tax Act 1961, should not be made. We hereby state that we have filed True and correct Return of Income. We have not concealed nor had given any in accurate particulars. 6. At the first instance, while replying to the penalty show-cause notice dated 28.12.2015, the assessee has not protested that the show-cause notice issued by the Department was not proper as there was no basis for issuance of the notice under section 271 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... below including paper book filed by the assessee. The interest payable to Syndicate Bank was not paid by the assessee before the due date for filing of return of income, but, in the profit and loss account, the assessee has claimed the same as expenses incurred by the assessee. Before us, the ld. Counsel for the assessee has submitted that the loan from the Syndicate Bank has become a non performing asset and that the interest outstanding was disclosed in the financial statements. It was further submission that the assessee has wrongly claimed the interest expenses, which ought to have been disallowed under section 43B of the Act, but, by oversight, it was not disallowed while filing of the income. Since the assessee has disclosed the above details in the balance sheet itself, it does not amount to concealment of income. It was further submission that based on the details furnished by the assessee, the Assessing Officer made the disallowance and therefore, it cannot be held as furnishing of inaccurate particulars of income. We find force in the arguments of the ld. Counsel. Admittedly, the assessee has furnished the details in its financial statements, but, the assessee ought to ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer levied penalty under section 271(1)(c) of the Act, which was confirmed by the ld. CIT(A). 10. We have heard the rival contentions. It is not in dispute that the assessee has claimed the export product development expenses as revenue expenditure. Since the expenditure incurred by the assessee was in the nature of enduring benefit, the Assessing Officer treated the same as capital in nature and brought to tax. Before us, it was the submissions of the ld. Counsel for the assessee that the assessee has claimed the export product development expenses as revenue expenditure only on the ground that the company s business operations were permanently closed since January, 2013. It was further submission that as there was no revival of business, the management of the assessee company decided to charge the same to the revenue account. It was further submission that once the condition of the assessee s business cannot revive anymore, there was no question of enjoying any enduring benefit for which the expenditure was incurred. However, the assessee has agreed for the disallowance. The ld. Counsel for the assessee has vehemently argued that it is not only an agreed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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