2023 (6) TMI 217 - AT - Income Tax

Penalty u/s. 271(1)(c) - cash payment in excess of Rs. 20,000 u/s 40A - payment in cash was made for hospital bills as the hospitals did not accept payment through cheques - HELD THAT - AO was not correct and justified in holding that the assessee has not furnished accurate particulars of income and hence, concealed particulars of income and liable to be imposition of penalty u/s. 271(1)(c) of the Act on account of furnishing of inaccurate particular of income particularly in a peculiar situation in the present case that the assessee has disclosed and recorded entire amount of claim incurred on medical emergencies under commercial expediency in the books of accounts of assessee. As decided in Reliance Petroproducts (P) Ltd 2010 (3) TMI 80 - SUPREME COURT merely because the claim of assessee was not accepted for not found to be acceptable by the revenue authorities the penalty u/s. 271(1)(c) of the Act, cannot be levied on the assessee. AO dismissed claim of expenditure of assessee on account of violation of section 40A(3) of the Act, without raising any other allegation or ground of dismissal and hence, when the assessee disclosed and recorded entire claim on medical emergencies in its books of accounts then neither it can be alleged that assessee has furnished inaccurate particulars of income or has concealed particular of its income. Decided in favour of assessee.

Summary

Issues:
The appeal against the order of CIT(A)-8, New Delhi dated 24.04.2019 for AY 2012-13.

Issue 1: Disallowance of expenditure under section 40A(3) of the Act

The assessee claimed medical expenditure on employees and directors, disallowed by AO for cash payments exceeding Rs. 20,000. The assessee argued that payments were made under commercial expediency due to medical emergencies. The AO imposed penalty under section 271(1)(c) for allegedly furnishing inaccurate particulars of income. However, the Tribunal noted that the expenditure was genuine and recorded in the books of accounts. Citing the case of Reliance Petroproducts (P) Ltd. vs. CIT, the Tribunal held that penalty cannot be levied solely based on non-acceptance of the claim by revenue authorities. As the assessee had disclosed and recorded the expenditure, it was held that there was no concealment of income. Consequently, the penalty was directed to be deleted.

*Separate Judgement by Shri Chandra Mohan Garg, Judicial Member*