2010 (10) TMI 1216 - AT - Income Tax

Summary

Issues involved: Appeal against sustaining penalty u/s 271(1)(c) of IT Act for adhoc disallowance of expenses and disallowance of claim u/s 80HHE.

Adhoc Disallowance of Expenses:
- Assessee, a private limited company in computer parts trading, filed return declaring NIL income with expenses totaling &8377;4,11,42,118.
- AO disallowed &8377;1,00,000 expenditure for lack of evidence.
- Assessee explained non-production of details due to business closure and technical issues.
- Tribunal found AO's disallowance not due to bogus claims but lack of complete details.
- Citing Supreme Court precedent, Tribunal held no inaccurate particulars furnished.
- Penalty unjustified, appeal allowed based on bona fide belief and disclosure of primary facts.

Disallowance of Claim u/s 80HHE:
- Assessee claimed deduction u/s 80HHE based on Tax Audit Report and auditor's certificate.
- Claim disallowed due to sunset clause, not eligibility issue.
- Assessee argued bonafide belief in claiming deduction.
- Tribunal noted claim not bogus, but disallowed due to ineligibility.
- Relying on legal precedents, Tribunal found no concealment or inaccurate particulars.
- Penalty cancelled following Supreme Court and Tribunal decisions.

Conclusion:
- Tribunal allowed the appeal, deleting the penalty based on the Hon. Supreme Court's decision and Tribunal precedent.
- Decision pronounced on 08.10.2010.