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TMI Blog2010 (11) TMI 205X X X X Extracts X X X X X X X X Extracts X X X X ..... he CIT(A)- XI, Ahmedabad dated 25-06-2010 for assessment year 2003-04, challenging the levy of penalty u/s 271(1)(c) of the IT Act. 2. I have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. 3. Briefly, the facts of the case are that in this case, assessment u/s 143(3) read with section 147 of the IT Act was completed on 20-07-2009 determining the total income at Rs. 2,64,690/- as against returned income of Rs. 91,750/- after making addition on account of disallowance of capital expenditure. Penalty proceedings were also initiated. The assessee submitted before the AO at the assessment stage that the assessee has raised the share capital during the year and has paid stamp duty expenses of Rs. 1,73,040/- to the Registrar of Companies,Gujarat. The assessee also stated that it has no objection to the proposed disallowance of the said expenditure. The AO accordingly disallowed Rs. 1,73,040/- and on the same matter penalty proceedings were initiated. The AO also noted that the assessee has not filed any appeal against the addition on merit. The AO noted in the penalty order that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorized by the assessee company, attended and the case was discussed with him. The assessee company has also filed a submission dated 06-07-2009, stating that the assessee has raised the share capital during the year and has paid stamp duty expenses of Rs. 1,73,040/ - to the Registrar of Companies, Gujarat. The assessee has further stated it has no objection to the proposed disallowance of the said expenditure. Also on being asked, vide order sheet entry dated 20-07-2009 to show cause as to why the above expenditure should not be disallowed, the AR of the assessee has also agreed to treat the above expenditure as capital expenditure. Thus the unlawful claim of the appellant was detected by the A. O. and the appellant had no explanation to offer and agreed for the disallowance. The said disallowance was not appealed against. 2.2.1 The Apex Court in the case of Punjab State Industrial Corporation v. CIT 225 ITR 792 and Brooke Bond India Ltd. v. CIT 225 ITR 798 held that expenditure incurred in connection with increasing share capital by a company would not be allowable as revenue expenditure. These decisions date back to the year 1997. 2.2.2 Therefore, in view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 1,73,040/- on account of stamp duty. The proceedings u/s 147 of the IT Act was initiated by re-opening the assessment. The assessee accepted before the AO at the assessment stage that above stamp duty expenses was paid to the Registrar of Companies and agreed to the proposed addition. The addition was not challenged in further appeal. Therefore, it is undisputed fact that the addition remained confirmed. The AO accordingly noted in the penalty order that the assessee has furnished particulars which were factually incorrect and not bona fide for which penalty was leviable. The AO also noted in the penalty order that concealment can take place by way of any item of receipt suppressed fraudulently or an item of expenditure which may be falsely claimed. The AO, therefore, noted that the assessee has made false and wrong claim of expenditure in the return of income which was not in accordance with Income Tax Act. The action of the assessee was found to be furnishing inaccurate particulars of income and, therefore, concealed the taxable income. It is also admitted fact that the assessee has made a wrong and bogus claim of deduction of expenditure in the profit loss account on acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndertaking engaged in generation and/or distribution of power. Admittedly, the assessee-company was not engaged in generation and for distribution of power, during the relevant year. Thus, the provisions of clause (i) of sub-section (1) of section 32 would not apply in respect of the assets claimed to have become unusable and written off. Therefore, the assessee had no justification to claim this amount of Rs. 13,24,539 as a revenue expenditure. In fact, the assessee did not claim, either before the Assessing Officer or before the Commissioner (Appeals) that such a deduction was permissible under section 32(1) (ii). It was also not the case of the assessee that it was under a bona fide belief that these two amounts could be claimed as revenue expenditure. The assessee was a company which must be having professional assistance in computation of its income, and its accounts were compulsorily subjected to audit. The Tribunal erred in law in deleting the penalty in respect of the amount of Rs. 1 lakh claimed as deduction on account of payment of income-tax and the amount of Rs. 13,24,539 debited under the head equipment written off , in the profit and loss account of the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces in the penalty proceedings, he would be deemed to have failed to discharge the onus placed on him and levy of penalty would be justified. I rely upon the recent decision of the Hon ble Delhi High Court in the case of CIT v. Harprasad Co. Ltd. 328 ITR 53. 8. Considering the above discussions it is clear that merely because the assessee made a claim in profit loss account of the deduction would not absolve the assessee from levy of penalty because the claim of the assessee was not bona fide and that the assessee had made a false and wrong claim of deduction of the expenditure in the profit loss account against settled legal proposition. Since the assessee has made false and wrong claim in the return of income of deduction of the capital expenditure, therefore, the authorities below have rightly levied and confirmed the penalty in the matter. Accordingly, the decision in the case of Reliance Petroproducts Pvt. Ltd. ( supra ) is clearly distinguishable from the facts of the case. Considering the above discussions, I do not find any merit in the appeal of the assessee. The same is accordingly dismissed. 9. In the result, the appeal of the assessee is dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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