TMI Blog2021 (10) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... culars because everything decided by the AO as well as ld. CIT (A) on ad hoc basis on the basis of their guesswork. Even otherwise, we fail to comprehend as to what enduring benefit has been created in favour of the assessee by incurring expenses on salary wages, communication expenses, marketing expenses etc. because these are expenses which are necessary to carry out day-to-day business. Moreover, it is a debatable issue if the expenditures are capital or revenue in nature as has been held by Hon ble Punjab Haryana High Court in case of CIT vs. Gurdaspur Cooperative Sugar Mills Ltd[ 2013 (3) TMI 175 - PUNJAB AND HARYANA HIGH COURT] . Also as perused the documents brought on record by the assessee hich go to shows that how much revenue was booked by the assessee and how much was the reimbursement of the expenses leading to no difference in the income shown in the 26AS and profit loss account. Ld. DR for the Revenue has failed to point out any difference in the income shown in Form 26AS and profit loss account as explained by the assessee. So, on this score also, the Revenue has failed to prove if inaccurate particulars have been furnished by the assessee. AO h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer made disallowance of expenditure of ₹ 1,03,03,818/- being 50% of expenditure claimed of ₹ 2,06,07,635/- considering the same being capital in nature having enduring benefits; made addition of ₹ 11,77,467/- being the alleged difference between income shown in 26AS and income shown by the assessee in profit and loss account on his failure to file reconciliation, AO initiated penalty proceedings under section 271(1)(c) of the Act. On failure of the assessee to file any explanation to the show-cause notice issued u/s 271(1)(c) read with section 274 of the Act, AO proceeded to levy the penalty for furnishing inaccurate particulars of income to the tune of ₹ 39,38,820/- @ 100% of the tax sought to be evaded. 3. Assessee carried the matter before the ld. CIT (A) by way of filing the appeal who has given part relief by deleting the penalty levied on the basis of addition of ₹ 6,58,710/- by partly allowing the appeal. Feeling aggrieved by the order passed by the ld. CIT (A), the assessee has come up before the Tribunal by way of filing the present appeal. 4. We have heard the ld. Authorized Representatives of the parties to the appeal, gone thro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment proceedings? 9. So far as penalty levied by the AO and confirmed by the ld. CIT (A) qua ad hoc disallowance/addition of ₹ 1,03,03,818/- being 50% of the expenditure debited in the profit loss account by treating the expenditure as capital in nature is concerned, it is a settled principle of law that on the basis of mere disallowance of expenditure claimed as per books of account, penalty u/s 271(1)(c) of the Act cannot be levied unless any particulars in the return of income has been found to be false or incorrect. 10. Hon ble Supreme Court in a case cited as Reliance Petro Products Pvt. Ltd. 322 ITR 158 (SC) while interpreting the provisions contained u/s 271(1)(c) of the Act decided the identical issue in favour of the assessee. Operative part of which is reproduced for ready reference as under :- A glance at the provisions of section 271(1)(c) of the I.T. Act, 1961 suggests that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The meaning of the word particulars used in section 271(1)(c) would embrace the detail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and mechanically without regard to the particular facts and circumstances of a given case. 12. Even otherwise, we fail to comprehend as to what enduring benefit has been created in favour of the assessee by incurring expenses on salary wages, communication expenses, marketing expenses etc. because these are expenses which are necessary to carry out day-to-day business. 13. Moreover, it is a debatable issue if the expenditures are capital or revenue in nature as has been held by Hon ble Punjab Haryana High Court in case of CIT vs. Gurdaspur Cooperative Sugar Mills Ltd. (supra) by returning following findings :- Assessee received a sum as grant-in-aid from State Government and same was disclosed as capital receipt Assessing Officer, however, treated receipt of grant-in-aid as revenue receipt and thereafter levied penalty under section 271(1)(c) Whether since issue whether amount of grant-in-aid was capital receipt or a revenue receipt was a debatable issue, penalty under section 271(1)(c) was not imposable Held, yes. 14. So far as question of levying the penalty qua addition of ₹ 11,77,467/- being the difference between income shown in 26AS and in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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