TMI Blog2019 (3) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... Loss incurred by the assessee on account of debiting the interest expenses to the Profit and Loss Account, is not allowable to carry forward - assessee filed belated return of income - There is no taxes ought to be evaded by the assessee as the assessee has not carried forward loss to the subsequent years. - HELD THAT:- loss arising out of claim of interest could also be not carried forward as the assessee filed belated return of income and therefore there is no loss to the Revenue. Hence no penalty is leviable u/s. 271(1)(c) of the Act - Decided in favour of assessee. - ITA NO.5257/MUM/2016, CO. NO. 6/MUM/2018 - - - Dated:- 31-12-2018 - Shri C.N. Prasad, Hon'ble Judicial Member And Shri N.K. Pradhan, Hon'ble Accountant Member For the Assessee : Shri Rajan Vora For the Department : Shri Rajiv Gubgobra ORDER PER C.N. PRASAD (JM) 1. Revenue in its appeal is challenging the order of the Learned Commissioner of Income Tax (Appeals) 6, Mumbai [hereinafter in short Ld.CIT(A) ] dated 06.05.2016 for the Assessment Year 2012-13 in deleting the penalty levied u/s. 271(1)(c) of the Act. 2. Briefly stated the facts are that, assessee engaged in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition made by the Assessing Officer and had not contested the same and further mere making of a claim which is not maintainable in law, by itself, will not amount to furnishing inaccurate particulars of income, by following the decision of the Apex Court in the case of CIT v. Reliance Petro Products (P.) Ltd. [322 ITR 158]. Aggrieved by the Ld.CIT(A) order the Revenue is in appeal before us. 5. Ld. DR vehemently supported the orders of the Assessing Officer. 6. Learned Counsel for the assessee Shri Ranjan Vora submitted that Assessing Officer while passing the Assessment Order u/s. 143(3) of the Act made disallowance u/s. 36(1)(iii) of the Act stating that interest expenditure was incurred towards purchase of the flats and the said flats were not put to use for business purposes and therefore interest is not allowable. Ld. Counsel for the assessee referring to the provisions of section 36(1)(iii) of the Act submitted that, where interest is paid, in respect of capital borrowed for the purpose of the business which includes purchase of inventories the same shall be allowed u/s. 36(1)(iii) of the Act. It is submitted that the borrowings have been used for purchasing i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n taken and the interest paid on the same, therefore it is submitted that since the facts pertaining to the said interest expenses were disclosed in the accounts as well as in the return of income, no penalty should be levied. Reliance is placed on the decision of the Hon'ble Apex Court in the case of CIT v. Reliance Petroproducts Pvt Ltd [322 ITR 158]. 9. We have heard the rival submissions, perused the orders of the authorities below. In this case, assessee filed return of income belatedly and the loss incurred by the assessee on account of debiting the interest expenses to the Profit and Loss Account, is not allowable to carry forward. In the assessment proceedings the Assessing Officer held that interest expenses cannot be allowed as deduction. The Assessing Officer disallowed the interest expenses and computed the income at ₹.1,33,56,280/-. He initiated penalty proceedings and levied penalty at 150% on the disallowance of interest made in the Assessment Order. It is not in dispute that the assessee has made complete disclosure of interest expenses in the Books of Accounts as well as in the return of income. The return was filed belatedly and no loss could be ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strued within the terms and language of the particular section. Findings in the assessment proceedings for determining or computing tax cannot be said to be conclusive for the purpose of levy of penalty. Penalty u/s.271(1)(c) is levied @ 100 per cent to 300 per cent of tax sought to be evaded for concealment of particulars of income or furnishing inaccurate particulars thereof. Section 271(1)(c) needs to be read along with the Explanations provided therein. Section 271(1)(c) and Explanation-1 of sec.271(1)(c) read as under :- 271. Failure to furnish returns, comply with notices, concealment of income etc. (1) if the Assessing Officer or the Commissioner (Appeals) or the Commissioner in the course of any proceedings under this Act, is satisfied that any person (c) Has concealed the particulars of his income or furnished inaccurate particulars of such income, or He may direct that such person shall pay by way of penalty- (iii) in the cases referred to in clause (c) or clause (d), in addition to tax, if any, payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of fax sought to be evaded by reason of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1)(c) that the decision in Dilip N. Shroff v. Joint CIT was overruled. The department in the Reliance Petro Products (supra) had argued that since the appellant had claimed excessive deduction knowing that they are incorrect; it amounted to concealment of income. The Hon'ble Court did not find substance in such argument and noted that the above, by itself, to be insufficient to attract penalty. It held as under: A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee.......As the assessee had 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 the concealment of income on its part. It was up to the authorities to accept its claim in the return or not. 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, in our opinion, attract the penalty u/s.271(1)(c). If we accept the contention of the Revenue then in case of every return where the claim made is not accept ..... X X X X Extracts X X X X X X X X Extracts X X X X
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