9911796707
TMI Blog2021 (12) TMI 1320X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessment Year 2005-06. 2. The only issue raised by the assessee is that the learned CIT (A) erred in confirming the penalty levied by the AO under section 271(1)(c) of the Act in part on the reasoning that the assessee has furnished inaccurate particulars of income. 3. The facts in brief are that the assessee in the present case is a private limited company and engaged in the business of trading of intermediate drugs. The assessee in the year under consideration has claimed an expense of Rs. 28,48,709/- under the head research and development. It was also submitted that the assessee is maintaining research and development facility approved by DSIR vide order dated 25-04-2008. However, the AO was not satisfied with the contention of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses were not doubted by the authorities below. As such the learned CIT (A) disallowed only 50% of the expenses in his order on the reasoning that the sister concern of the assessee was also enjoying the benefit on account of the research and development activity carried on by the assessee. As such the penalty was levied under section 271(1)(c) of the Act on the basis of the addition which was made on adhoc basis. Therefore, the assessee cannot be charged with the allegation that it has furnished inaccurate particulars of income. 7. On the contrary the learned DR vehemently supported the order of the authorities below. 8. We have heard the rival contentions of both the parties and perused the materials available on record. In the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the penalty provisions under section 271(1)(c) have to be invoked. Thus, if we apply this logic, then any addition made by the AO in the assessment would lead either to concealment of the particulars of income or furnishing inaccurate particulars of income. In other words the assessee furnishes the particulars of income in his income tax return which is subsequently verified by the revenue. If in the process of verification of the income of the assessee, the AO calculates different total income than the income declared by the assessee, the difference between incomes declared by assesses and assessed by the AO would amount to furnishing of inaccurate particulars of income or concealment of income. However, we note that the Hon'ble Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosed by him, then the amount added or disallowed to the total income of the assessee shall be deemed as concealment of income. 8.4 Coming to the present case, we have to test whether the case of the assessee falls under the main provisions of section 271(1)(c) of the Act or explanation 1 attached with it. 8.5 As regards the main provisions of section 271(1)(c) of the Act, we find that the genuineness of the expenses were not doubted by the learned CIT (A). It was only alleged that the associated concern /sister concern have availed the benefit of the expenditures incurred by the assessee out of research and development activity. Therefore, the entire expenses cannot be allowed as deduction to the assessee. As per the learned CIT (A) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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