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TMI Blog2022 (12) TMI 304X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Assessing Officer ("AO") completed the assessment on 30.11.2015 determining the total income at Rs. 88,28,58,120/- including therein certain additions / disallowances. He initiated penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961 (the "Act"). On appeal by the assessee before the Ld. CIT(A) the disallowance of Rs. 89,89,571/- on account of section 14A; addition of Rs. 2,00,000/- on account of provision for gratuity, addition of Rs. 57,38,564/- on account of difference in 26AS and addition of Rs. 22,02,437/- on account of short term capital gain were confirmed by the Ld. CIT(A) vide his appellate order dated 23.12.2015. In response to penalty notices under section 271(1)(c) issued on 30.11.2015 and 03.03.2017 no reply was made by the assessee. The Ld. AO therefore passed order on 28.03.2017 imposing penalty of Rs. 55,58,014/- under section 271(1)(c) of the Act for furnishing inaccurate particulars of income against which the assessee filed appeal before the Ld. CIT(A). 4. The assessee made lengthy submission before the Ld. CIT(A) during penalty proceedings which has been incorporated by the Ld. CIT(A) in para 5 of his appellate order in Appeal No. Del/CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from shipping business, any disallowance u/s 14A would automatically be allowable while computing income under the tonnage scheme. I find that the CIT(A) for the A.Y. 2007-08 in appeal no. 119/2009-10 has relied on the Delhi High Court's decision in the case of Sh. Ram Pistons and Rings Ltd. in giving direction to the AO while sustaining the addition made u/s 14A, that the benefit of tonnage tax scheme may be given on the finally determined income. The department, as per the appellant, has mot Challenged this particular finding of the CII(A) before ITAT. For the A.Y. 2008-09 also, the disallowance u/s 14A has been upheld On the other hand the Ld. CIT(A) for the A.Y. 2009-10 to 2011-12 has taken the view that since the appellant gets the benefit of tonnage tax u/s 115VP read with section 115 VR, the disallowance u/s 14A is not warranted." 6.5 With regard to the disallowance on account of provision of gratuity of Rs. 2,00,000/- it is contended that all the fact has been mentioned, while submitting the return and on the similar ground in AY 2012-13, penalty was levied by AO, which was deleted by the then CIT(A) 5, by following the decision of Hon'ble Supreme Court and vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the Return cannot amount to the inaccurate particulars." 6.9 In various case laws it has been held that mere disallowance of claim will not automatically result into imposition of penalty. In the case of Price Waterhouse Coopers Pvt Ltd., 25 taxmann.com 400(SC), the Hon'ble Supreme Court has held that if the information has been disclosed in the tax audit report then merely because it is disallowed it cannot be considered as furnishing inaccurate particulars of income or attempting to conceal its income and imposition of penalty is not justified. 6.10 it is seen in the case of appellant that the information was duly disclosed or submitted during the assessment proceedings and therefore this cannot be taken as concealment of income. 6.11 Therefore looking to the facts and circumstances of this case and in law where disallowance u/s 14A is covered by tonnage tax and tax neutral, other disallowances are either disclosed in the accounts or in audit and no bona fide of furnishing inaccurate particulars of income has been established, it is held that the penalty is not imposable and di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inaccurate particulars of the income" came up for consideration before the Hon'ble Supreme Court wherein their Lordships observed that as per Law Lexicon, the meaning of the word "particular" is a detail or details (in plural sense); the details of a claim or the separate items of an account. Therefore, the word "particulars" used in section 271(1)(c) would embrace the meaning of the details of the claim made. The Hon'ble Supreme Court further observed that the word "inaccurate" has been defined in Webster's Dictionary as "not accurate, no exact or correct; not according to truth etc.". Reading the word "inaccurate" in conjunction with "particulars" would mean the details supplied in the Return, which are not accurate, not exact or correct, not according to truth or erroneous. The Hon'ble Supreme Court went on to observe further that merely because the assessee had claimed the expenditure which claim was not accepted or was not acceptable to the Revenue, that by itself would not attract the penalty under section 271(1)(c) of the Act. In Pr. CIT vs. Sesa Goa Ltd. (20.21) 439 ITR 188 (Bom), The Hon'ble Bombay High Court held that an erroneous claim simplicitor does not automatically ..... X X X X Extracts X X X X X X X X Extracts X X X X
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