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TMI Blog2023 (11) TMI 547X X X X Extracts X X X X X X X X Extracts X X X X ..... otice dated 26th April 2005 under Section 143(2) of the Act was issued. Further notices were issued and served on assessee. The Assessing Officer (AO) completed the assessment under Section 143(3) of the Act determining the total income at Rs. 32,38,84,147/- under the normal provisions of the Act. The difference between the returned loss of Rs. 15,97,83,660/-. and assessed income of Rs. 32,38,84,147/- was due to various additions / disallowances. Three of the disallowances made were related to capitalization of fees paid to S. B. Billimoria & Co. of Rs. 19,44,000/-, disallowance of legal fees claimed in case of Deejay System Consultants Pvt Ltd. of Rs. 4,85,000/- and disallowance of claim of provision of diminution in value of investments w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aiming the above expenses as business expenditure. 2. Whether on the facts and circumstances of the case and in law the Hon'ble ITAT was justified in deleting the penalty levied u/s. 271(1)(c) of the L.T. Act on account of disallowance of legal fees of Rs. 4,85,000/- paid by the assessee to Deejay System Consultant Pvt Ltd. in connection with joint venture with Power Grid Corporation without appreciating that the assessee has furnished) inaccurate particulars of income by claiming the above expenses incurred in connection with new business venture as business expenditure as against capital expenditure. 3. Whether on the facts and circumstances of the case and in law the Hon'ble ITAT was justified in deleting the penalty levied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of concealment of income or furnishing of inaccurate particulars of income. The ITAT has agreed with the CIT(A) that the circumstances were such that if assessee would not have made this claim in the relevant assessment year, i.e., A.Y. 2004-2005, assessee would have lost the benefit for many years. The ITAT on the facts has agreed with the CIT(A) that assessee had made claim in transparent and befitting manner. In view of these conclusions arrived on facts, the ITAT agreed with the view of the CIT(A) that assessee has not committed any default or filed any inaccurate particulars of income warranting imposition of penalty. 8. It would be apposite to reproduce paragraph 12 of the Judgment of the Apex Court in Commissioner of Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the Revenue, that by itself would not, in our opinion, attract the penalty under Section 271(1)(c). If we accept the contention of the Revenue then in case of every Return where the claim made is not accepted by Assessing Officer for any reason, the assessee will invite penalty under Section 271(1)(c). That is clearly not the intendment of the Legislature. 9. The Apex Court has held that where assessee has furnished all the details of its expenditure as well as income in its return, which details, in themselves, were not found to be inaccurate nor could be viewed as concealment of income on its part and where the AO has taken a particular view contrary to the view that assessee had, it would not attract any penalty under Section 271( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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