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2015 (7) TMI 336 - ITAT BANGALOREPenalty u/s. 271(1)(c) - disallowance of deduction u/s. 10A of the Act and disallowance of ₹ 10 lakhs of administrative selling and other expenses - filing return of income belatedly - Penalty imposed was cancelled by the CIT(A) - Held that:- The conduct of the assessee in filing return of income belatedly is sufficiently explained before the CIT(A). Perusal of the orders of the AO while concluding assessment u/s.143(3) of the Act shows that it was only the director who attended proceedings of assessment before the AO. In our view, the explanation so offered by the assessee deserves to be accepted. In this regard, the CIT(A) has also noticed the fact that the IT industry was undergoing a recession phase at the relevant point of time. The complaint that there was non-cooperative attitude on the part of the assessee is also not true. The non-cooperative attitude is cited by the Revenue in the context of assessee not having furnished any reply to the show cause notice issued u/s. 274 of the Act before imposing penalty u/s. 271(1(c) of the Act. In our view, this cannot be the basis to impose penalty as the penalty is with reference to concealment of particulars of income or furnishing of inaccurate particulars of income with reference to the original assessment proceedings. As far as the complaint of the Revenue that the assessee furnished inaccurate particulars by making wrong claim of deduction u/s. 10A of the Act is concerned, we find that this is not the basis on which deduction u/s. 10A was denied to the assessee. As rightly contended by the assessee, deduction u/s. 10A was denied only for technical reasons viz., return of income not having been filed on or before the due date u/s. 139(1) of the Act. In our view, therefore, the contentions put forth by the Revenue before us is unsustainable. In our view, the CIT(A) has rightly come to the conclusion that mere making of a claim for deduction u/s. 10A which is not allowed, cannot lead to the conclusion that assessee is guilty of having furnished inaccurate particulars of income or having concealed particulars of income. The CIT(A) has rightly placed reliance on the decision of the Hon’ble Supreme Court in Reliance Petro Products Pvt. Ltd. (2010 (3) TMI 80 - SUPREME COURT ). Even with regard to adhoc disallowance of administrative selling and other expenses of ₹ 10 lakhs, disallowance has been made only for want of bills & vouchers. There is nothing on record to suggest that the expenditure disallowed was bogus, excessive or personal in nature. No adverse inference can be drawn against the assessee in respect of disallowance of ₹ 10 lakhs. - Decided against revenue.
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