2012 (3) TMI 483 - AT - Income Tax

Summary

Issues involved: Appeal against penalty imposed u/s 271(1)(c) for disallowance of expenses.

Summary:

1. Disallowance of Expenses:
The appeal was filed against the penalty imposed u/s 271(1)(c) for disallowance of Dmat charges and service tax claimed as business expenses. The AO disallowed these expenses, adding a total of &8377; 5,72,456 to the total income of the assessee, alleging inaccurate particulars of income.

2. AO's Decision and Penalty Imposition:
The AO disallowed the expenses related to share transactions, claiming they were not allowable deductions for short or long term capital gains. He imposed a penalty of &8377; 1,71,750 u/s 271(1)(c) for furnishing inaccurate particulars of income.

3. CIT(A) Decision:
The CIT(A) sustained the penalty in part, holding that Dmat charges and service tax should have been disallowed and added back to the total income as they were for business purposes. He found the AO's penalty justified for these expenses.

4. Tribunal Decision:
In an ex-parte hearing, the Tribunal considered the nature of the assessee's business and the bonafide claim for deduction of Dmat charges and service tax. Referring to the case law, the Tribunal concluded that the disallowance of these expenses did not amount to furnishing inaccurate particulars of income. Therefore, the penalty u/s 271(1)(c) was canceled, allowing the appeal of the assessee.

5. Conclusion:
The Tribunal canceled the penalty imposed by the AO and sustained by the CIT(A), allowing the appeal of the assessee.