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TMI Blog2010 (3) TMI 843X X X X Extracts X X X X X X X X Extracts X X X X ..... old that there is no case for levy of penalty under section 271(1)(c). The levy of penalty is accordingly cancelled. The appeal of the assessee is allowed. - IT Appeal No. 413 (Ahd.) of 2007 - - - Dated:- 31-3-2010 - Bhavnesh Saini, D.C. Agarwal, JJ. S.N. Divatia for the Appellant. M.C. Pandit for the Respondent. ORDER D.C. Agarwal, Accountant Member This is an appeal filed by the assessee against the order of the learned Commissioner of Income-tax (Appeals) dated November 24, 2006 wherein he has confirmed the penalty levied under section 271(1)(c) of Rs. 3,95,500. 2. The facts of the present case are directly related with the facts as discussed by us in I. T. A. No. 2913/Ahd/2004 decided on the even date. No pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23, 2001. 3. The assessee made a claim of this expenditure in the profit and loss account but it was disallowed by the Assessing Officer. He also initiated penalty proceedings in response to which the assessee required the Assessing Officer to keep the proceedings pending as it had filed appeal before the Tribunal. 4. The Assessing Officer however, did not agree and levied the minimum penalty of Rs. 3,95,500. 5. The learned Commissioner of Income-tax (Appeals) confirmed the penalty on the ground that the real purpose is totally known to the assessee and there is no business expediency for the payment of this amount. It was only a device adopted to reduce the incidence of tax and the same amounts to furnishing of inaccurate particulars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firmation thereof by the appellate authorities is one thing and levy of penalty is another. 8. Addition has been confirmed only on the ground that it is capital in nature or that it was not proved that it was for business purposes. Even in a case where the assessee is not able to bring out adequate evidence to prove business purpose, it would not lead an automatic inference that claim was mala fide or not genuine. Surrounding circumstances has to be seen to infer that payment could have been made for business purposes though not proved to the extent that it can be allowed as a deduction. As already pointed out above, payment has gone from the bank account of the assessee to the bank account of Tirupati Traders and Tirupati Traders has fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a case of filing inaccurate particulars cannot be sustained. Merely because the claim made by the assessee is not found acceptable cannot lead to the inference that claim was rather false or particulars furnished in support of the claim were inaccurate. Non acceptance of the claim is different from false claim or inaccurate particulars having been filed in support of the claim. In our considered view the case of the Assessing Officer/the learned Commissioner of Income-tax (Appeals) does not fall in the main proviso of section 271(1)(c) as there is no evidence to this effect. Whatever finding is given about furnishing in-accurate particulars is not in accordance with the law. 10. If we look at the Explanation to section 271(1)(c), we not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nation 1(B) which reads as under : "such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purpose of clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed." 11. Unless the Assessing Officer gives a finding on the basis of material on record that all these conditions are cumulatively and simultaneously satisfied, penalty under section 271(1)(c) read with Explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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