9911796707
TMI Blog2022 (3) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... activity during the year under consideration. Also, the depreciation claimed by the assessee was also disallowed since no asset was put to use during the year for the purpose of carrying out business activity of the assessee. The assessee's alternative claim u/s.57(iii) of the Act was also rejected for the reasons discussed in detail in the assessment order. Simultaneously, penalty proceedings were initiated by issue and service of notice u/s. 274 r.w.s 271(1)(c) dated 12.12.2013 for furnishing inaccurate particulars of income. However, there was no compliance from the assessee's end in this regard. Against the assessment order, assessee filed appeal before the CIT(A). The Ld. CIT(A) dismissed the assessee's appeal. Subsequently, Assessing Officer levied penalty of Rs..6,64,76,192/- u/s. 271(1)(c) of the Act. 3. Aggrieved assessee preferred an appeal before the Ld.CIT(A) and before him assessee made the detailed submissions which are reproduced below: "Maharashtra Electronics Corporation Limited (MELTRON) was incorporated in the year 1978 as a fully owned corporation of Government of Maharashtra (GOM). Further the Government of Maharashtra vide its order dated 30.10.2003, has di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant has filled the returns for earlier assessment years claiming business loss as well as depreciation, which A. O. as per para 8.2.2 of Assessment order has denied to Appellant for carried forward. The claiming of loss are as per the ITR filed for the earlier years and the facts were also brought to the notice of AO and with no intention to file inaccurate particulars as stated by AO. The Appellant has incurred General Administrative Expenditure of Rs. 17.97 Lacs. The company is maintaining office premises and vehicles and has claimed deprecation of Rs. 2,21,95,218/including the deprecation on the Building which is still in use and will also be in use fill the Company has been winded. Apart from this there are borrowings by the Appellant from State Government and Financial Institution and as per loan agreement the Appellant has provided interest on the borrowing at Rs. 1770 Lacs. To meet the normal expenditure the Appellant is maintaining certain balances in FDR with banks and has earned interest of Rs. 4,32,283/. Since the net worth of the Company is negative and the funds were kept in FDR are from the borrowed funds, therefore the appellant has not considered interest a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of facts. All the facts are fully disclosed on the face of the audited accounts. The Appellant has not failed to offer explanation and the explanation offered has not found false and all relevant details asked by AO has been filed before AO from time to time. As stated above, being a Government Company no one in person in interested in "concealment" to committing the willful default." 4. After considering detailed submissions of the assessee Ld.CIT(A) allowed the appeal filed by the assessee and deleted the penalty levied by the Assessing Officer with the following observation: - "4.6 Bonafide in Appellants case: Adverting to the facts of the case, it appears that the AO has laid much stress on the fact that the loss declared in the return of income has been disallowed and, therefore, he has considered the appellant to be in default u/s 271(1)(c) of the Act. In doing so he has not appreciated that: a) The appellant is wholly owned by the Government of Maharashtra and in view of continued losses it had become a Slick Company under BIFR and no proceedings under any law could be Instituted under provisions of other Acts, including Income Tax Act, 1961, b) The Government of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e penalty of 6,64,76,192/- levied u/s. 271(1)(c) is directed to be deleted." 5. Aggrieved revenue is in appeal before us raising following grounds in its appeal: - "1. "On the facts and circumstances of the case and in law the Ld. CIT(A) erred in deleting the penalty of Rs. 6,64,76,192/without considering the fact that the assessee had no business receipts assessable u/s. 28 of the Act , yet is clamed various expenses related thereto from it which is distinguishable from the facts of the case in CIT vs Reliance Petroproducts (P) Ltd (2010) 322 ITR 158 (SC) " 2. The appellant prays that the order of the Ld.CIT(A) on the above ground be set aside and that of the AO be restored. 3. The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary." 6. At the time of hearing, Ld. DR brought to our notice Para No 4 of the Assessment Order and submitted that Assessing Officer has deleted the expenditure claimed by the assessee in its Profit and Loss Account with the finding that the assessee has not carried out any business activity. Therefore, assessee cannot claim any expenditure in the absence of business activities during the year and subsequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e finding of the Ld.CIT(A) that a particular claim made legitimately in the return of income and not allowed because of provision, the mere disallowance of legitimate claim where the factual matrix has not been suppressed, penalty cannot be leviable. In the given case assessee has brought on record all the relevant information that assessee has not carried out any business activity however it has incurred certain expenditure and claimed the same as allowable under the head "business expenditure". However, the tax authorities thought it differently and disallowed the same. Merely because tax authorities has not allowed the expenditure claimed by the assessee it is certainly falls within the category of particulars declared by the assessee and the fact are same to the facts of CIT v. Reliance Petro Products (P) Ltd., (supra). Therefore, we are in agreement with the finding of the Ld.CIT(A), accordingly, we do not see any infirmity with the decision of the Ld.CIT(A). Accordingly, ground raised by the revenue is dismissed. 10. We observe that Ld. DR relied on CIT v. S.V. Angidi Chettiar [44 ITR 739], we observe that the facts in that case is relating to section 28(i)(c) of the Act rel ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
