2014 (1) TMI 431

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..... nd thereafter the assessment was framed u/s 143(3) vide order dated 19.12.2008 by making disallowance and the total income was determined at Rs.21,22,610/- 3. During the course of assessment proceedings A.O. noticed that assessee has claimed aggregate expenditure of Rs.1,88,247/- comprising of bank charge of Rs.1607/-, legal and professional expenses Rs.4500/-, telephone and trunkcall expenses of Rs.27,943/-, account writing charges of Rs.24,000/- and interest on bank O/D Rs.1,23,197/-. These expenses were claimed as expenditure u/s 57 against the income earned from other sources. The A.O. was of the view that the expenses which have been claimed by the assessee have no direct relationship with the income earned and therefore the same were .....

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..... held by the ITAT, Mumbai in the case of Supreme Industries 122 TTJ 56 that if the appellant makes patently wrong claim of expenses/deductions, then penalty u/s 271(1)(c) is leviable. In this case also the appellant has made patently wrong claim of expenses on which penalty u/s 271(1)(c) is leviable." Against the aforesaid order of CIT(A) the assessee is now in appeal before us. 4. Before us ld. A.R. submitted that assessee did not prefer appeal against disallowance of expenses on account of smallness of amount. He further submitted that assessee had bonafidely claimed the expenses and also disclosed it in the return of income. The assessee had submitted all the details in respect of expenses claimed u/s 57 in the return of income filed be .....

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..... the A.O. during the course of assessment proceedings. It is also a fact that the assessee has not preferred appeal against the aforesaid disallowance of expenses. It is a fact that the details of expenses have been filed by the assessee before the A.O. during the course of assessment proceedings. 7. In the case of CIT vs. Reliance Petro Products 322 ITR 158 (SC) Hon'ble Supreme Court has held that merely because the assessee has claimed the expenditure and the claim has not been accepted or was not acceptable to the Revenue by itself would not attract penalty u/s 271(1)(c). It further held that if the contention of the Revenue was accepted then in case of every return where the claim made by assessee was not accepted by the A.O. the asses .....

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