2015 (8) TMI 4 - AT - Income Tax

Penalty u/s 271(1)(c) - disallowance of interest paid and disallowance of the expenditure claimed - CIT(A) deleted penalty levy - Held that - Expenditure of interest payment claimed by the appellant was not fictitious or bogus. It was a genuine expenditure claimed by the appellant and same was paid to the person from who loans were taken. There was no concealment of facts or furnishing of inaccurate particulars of income. The appellant has disclosed all the facts of the interest expenditure in the return of income and claim was made on the basis of payment made to the persons. Similarly, the deferred revenue expenditure was claimed on the basis of consistent method followed by the appellant. The expenditure in question was revenu9e but same was deferred for future years to be claimed against the income of future years. The expenditure was to be amortized in 5 years period and 1/5th was too be claimed every year. The amount debited of ₹ 22, 62,376/- consisted of ₹ 8, 04,076/- for A.Y 2008-09 and the balance amount of ₹ 14,58,300/- was pertaining to earlier years. The expenditure was revenue in nature and same was not bogus or not genuine. Everything was disclosed in the return of income and there was concealment or furnishing of inaccurate particulars. The disallowance made by the Assessing Officer was on the basis of difference of opinion. Any disallowance made on the basis of difference of opinion is not sufficient for arriving at conclusion that appellant has furnished inaccurate particulars of income or has concealed the income. The appellant has not furnished any inaccurate particulars in the return of income. Mere making a claim which is not sustainable in law by itself will not amount to furnishing of inaccurate particulars regarding the income of the appellant. Such claim made in the return of income cannot amount to the inaccurate particulars of income. - Decided in favour of assessee.

Summary

Issues:
- Correctness of penalty deletion under section 271(1)(c) of the Income Tax Act 1961.

Analysis:
1. The appellant challenged the correctness of the penalty deletion under section 271(1)(c) imposed by the CIT(A) XIII, New Delhi for the Assessment Year 2009-10, amounting to Rs. 7,39,338.

2. The assessing officer had made additions to the assessee's income due to excess interest paid and disallowance of expenses. The penalty was imposed based on these additions as the assessee failed to provide satisfactory explanations during assessment proceedings.

3. The appellant contended before the First Appellate Authority that the penalty was unjustified, citing explanations and judicial precedents. The CIT(A) deleted the penalty considering the explanations and precedents relied upon.

4. The Revenue appealed to the Tribunal, arguing that the CIT(A) did not adequately address all issues in the impugned order. The Senior DR highlighted discrepancies in the assessment order and the penalty imposition.

5. The Tribunal examined the submissions and records. It noted that the penalty was imposed only on the specific additions made by the assessing officer, emphasizing that the penalty order clearly specified the grounds for penalty imposition.

6. Considering the arguments presented, the Tribunal upheld the CIT(A)'s decision to delete the penalty. It found no infirmity in the impugned order and agreed with the reasoning provided by the CIT(A) regarding the genuineness of the expenses and interest payments claimed by the assessee.

7. The Tribunal concluded that the penalty imposed by the assessing officer was not justified based on the facts and explanations provided by the appellant. Therefore, the appeal of the Revenue was dismissed, affirming the deletion of the penalty under section 271(1)(c) for the Assessment Year 2009-10.