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2012 (11) TMI 757 - ITAT MUMBAIProcedure u/s 274 - levy the penalty 271(1)(c) On the date of hearing AO issue penalty order u/s 274 on the same day after getting approval from Add. CIT Assessee contended that Add. CIT did not apply his mind and acted in a mechanical way in giving his approval to levy penalty Held that:- On perusal of copy of approval by Add. CIT and the fact that penalty notice was issued in April, 2001, it is observed that penalty proceedings were kept in abeyance as the assessee filed appeal disputing the additions made by the AO. AO might had discussed the matter with Addl. CIT without waiting for the written submissions to be filed by the assessee. Therefore, mere surmise on the part of the assessee that there has not been application of mind by the Add CIT while granting his approval for levy of penalty u/s 271(1) (c). Issue decides in favour of revenue Penalty u/s 271(1)(c) - loss of sale of machine claim as revenue loss instead of capital loss Mere rejection of claim of the assessee held as concealment of income - Value of machine shown as CWIP - Machine become outdated without installation Machine transfer to store and was sold as store scrap Held that:- The disallowance of bonafide claim cannot be treated as furnishing inaccurate particulars of income or concealment of particulars of income. Mere rejection of the claim of the assessee would not attract provisions of Sec. 271(1)(c). It is not a case where it could be said that assessee has claimed the said loss as revenue loss dishonestly for avoiding tax particularly when all the relevant facts have been disclosed pertaining to the claim made. Even on erroneous claim for deduction cannot warrant penalty until and unless it is proved that the claim was made with dishonest intention. Issue decides in favour of assessee. Penalty u/s 271(1)(c) Assessee claim capital expenditure as revenue expenditure AO levy penalty u/s271(1)(c) on furnishing inaccurate particulars of income Concealment of income Held that:- As the issue as to whether the expenditure constitute revenue expenditure or capital expenditure is a debatable issue. The assessee placed all relevant facts in the return filed and made its claim bonafide as revenue expenditure. Nothing is available on record to show that the belief of the assessee and the explanation of the assessee were false and inherently impossible. Even an erroneous claim for deduction cannot warrant penalty unless and until proved that the claim is made with dishonest intention. In favour of assessee Penalty u/s 271(1)(c) Concealment of income AO disallow claim of interest expense in relation to advance given to subsidiaries/ sister concerns Held that:- mere making of claim which is not sustainable in law by itself will not amount to furnishing inaccurate particulars of information regarding income or concealment of income. The department has also not brought on record that the claim of the assessee was not bonafide. Issue decides in favour of assessee
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