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2013 (10) TMI 773 - ITAT AHMEDABADPenalty u/s 271(1)(c) of the Income Tax Act - The sum of Rs. 6,86,939/- was levied as penalty u/s. 271(1)(c) of the Act in respect of disallowance of bad debts of Rs. 11,58,112/-, disallowance out of membership fee of Rs. 4,80,000/- and addition of Rs. 2,76,700/- in respect of non moving sundry creditors. On appeal Ld. CIT(A) deleted the aforesaid penalty – Held that:- No specific error in the order of Ld. CIT(A) could not be pointed out by Ld. DR - No material was brought on record to show that the payment of Rs. 5 lacs as membership fee by the assessee was not genuine. The issue whether expenditure is a capital or a revenue expenditure is largely debatable issue and only because a different view in respect of nature of expenditure was adopted by the Department does not entitle the AO to levy penalty u/s. 271(1)(c) of the Act. Further no material was brought to show that non moving sundry creditors balance of Rs. 2,76,700/- was bogus or even any material to show that the same was income of the assessee of the year under consideration - In absence of any material to show that the said amount was actually income of the assessee of the year under consideration, in our considered, view levy of penalty u/s. 271(1)(c) in respect of the said amount was not justified. Further in respect of amount of Rs. 11,58,112/- which was claimed by the assessee as bad debt, no material was brought before us to show that the claim was false. Reliance has been placed upon the judgment in the case of Reliance Petroproducts [2010 (3) TMI 80 - SUPREME COURT], wherein it was held that merely because a deduction claimed by the assessee was found to be not allowable, does not entitle the Department to levy penalty u/s. 271(1)(c) - Decided against the revenue.
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