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TMI Blog2015 (3) TMI 532X X X X Extracts X X X X X X X X Extracts X X X X ..... the payee under Rule 6DD. Whereas, the assessee’s case has been that, the payments were made to the Government authorities and advance to the employees, genuineness of which have not been doubted. The disallowances have been made mainly on technical ground. In our opinion, such a disallowance does not warrant levy of penalty, because there is no furnishing of inaccurate particulars or concealment of income, because, it is not an absolute law that any payment made in cash excess of ₹ 10,000 is to be disallowed. Commercial expediency, business consideration and other factors are also required to be seen. Hence, we delete the penalty, which has been confirmed on such a disallowance.- Decided in favour of assessee. Disallowance on account of replacement of plant and machinery being held as capital expenditure - Held that:- It is an admitted fact that the assessee has debited certain the expenditure, which were incurred towards car, minibus, electronic typewriter etc., which are capital in nature. If such an expenditure has been claimed in the profit and loss account as revenue expenditure, then definitely it amounts to furnishing of inaccurate particulars of income. Thus, pena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Commissioner of Income Tax (A) has grossly erred in affirming the decision of the AO for imposing penalty of ₹ 53,20,782/-. 2. On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (A) has grossly erred in affirming the decision of the AO for imposing penalty u/s.271(1)(c) on disallowance u/s 80-I amounting to ₹ 43,64,230/- for grant of claim on account of reallocation of administrative expense. 3. On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (A) has grossly erred in affirming the decision of the AO for imposing penalty u/s 271(1)(c) on disallowance of ₹ 9,23,000/- on account of replacement of plant and machinery being held as capital expenditure. 4. On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (A) has grossly erred in affirming the decision of the AO for imposing penalty u/s 271(1)(c) on disallowance of ₹ 5,24,079/- u/s 40A(3) of Income Tax Act, 1961. 5. On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (A) has grossly erred in affirming the decision of the AO for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch reduction of claim u/s 80-I. The learned CIT(A) has confirmed the penalty on the ground that the claim made by the assessee was on adhoc method instead of any scientific method, and therefore, the assessee has claimed higher deduction, which amounts to filing of inaccurate particulars. 3.3 Before us, the learned Counsel submitted that in the assessment year 1983-84, the Tribunal has decided the issue of allocation of expenses and the same basis has been adopted ;by the assessee in the subsequent years. Thus, the basis adopted by the assessee by allocating expenses was as a result of Tribunal order in assessee s own case. Hence, no penalty for furnishing of inaccurate particulars can be levied. 3.4 On the other hand, the learned Departmental Representative, strongly relied upon the order of the CIT(A). 3.5 We have heard the rival submissions and also perused the relevant material placed on record. The difference in the claim of deduction u/s 80-IA is mainly on the basis of allocation of administrative expenses, which has been allocated in the ratio of turnover. The assessee s case had been that it has adopted the basis of allocation based on the precedent of Tribunal ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly from the point of levy of penalty u/s 271(1)(c). 4.4 On the other hand, the learned Departmental Representative had strongly relied upon the order of the CIT(A). 4.5 After considering the rival submissions and also on the perusal of the impugned orders, we find that the disallowance u/s 40A(3) was made on the ground that the assessee has failed to establish any extra ordinary situation or difficulty of the payee under Rule 6DD. Whereas, the assessee s case has been that, the payments were made to the Government authorities and advance to the employees, genuineness of which have not been doubted. The disallowances have been made mainly on technical ground. In our opinion, such a disallowance does not warrant levy of penalty, because there is no furnishing of inaccurate particulars or concealment of income, because, it is not an absolute law that any payment made in cash excess of ₹ 10,000 is to be disallowed. Commercial expediency, business consideration and other factors are also required to be seen. Hence, we delete the penalty, which has been confirmed on such a disallowance. 5. REPAIRS AND REPLACEMENT OF PLANT AND MACHINERY : 5.1 The Assessing Officer has di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appeal effect proceedings, the assessee filed a letter dated 03.09.2010 stating that the details of ₹ 14,60,970 are no longer available due to lapse of time. Accordingly, the AO had disallowed the entire sum including ₹ 14,60,970 and penalty has been levied. This levies of penalty has been confirmed by the CIT(A) also. 6.2 Before us, the learned Counsel submitted that the assessee had earlier filed a Writ Petition before Calcutta High Court, against certain adjustments made in intimation u/s 143(1). The Hon ble High Court, passed an interim order directing the AO not to proceed with such an adjustment and also directed not to serve the copy of the assessment order without the permission of the Court. Later on, vide order dated 26.06.2004, the Hon ble High Court quashed the intimation u/s 143(1), and finally the assessment order dated 30.03.1992 was served to the assessee in March 2004, i.e., after a gap of 12 years. Due to lapse of such a huge time, the assessee could not furnish the details of actual payment. All the particulars of the payment otherwise have been duly shown in the books of account, and therefore, the same cannot be held that such a disallowance c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,12,572 7. Royalty 2,21,459 2,21,459 8. Turnover Tax 13,26,405 13,26,405 9. Entry Tax 8,37,069 8,37,069 10. Water Cess 15,000 15,000 11. Surface rent / dead Rent 3,358 3,358 12. Electricity Duty 3,23,240 3,23,240 13 Municipal / Building Tax Nil 8,29,135 Total 48,29,984 59,10,847 6.5 Thus, the AO noted that except for two items listed at Sr.No.6 and Sr.No.13 all other expenses claimed for deduction by the assessee in assessment year 1988-89 are the same expenditures which the assessee had claimed in assessment year 1989-90, and therefore, the claim of expenditure has been made twice. Further, the expenditures men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ident from the first table as incorporated above. If the assessee has claimed the deduction u/s 43B on the basis of actual payment, then it should be held that the assessee s claim for deduction for the impugned assessment year is not bonafide or the assessee cannot be held liable for furnishing of inaccurate particulars. So far as the proof of evidence of payment is concerned, it is seen that there is a huge lag of time, because the assessment proceedings for giving effect of CIT(A) s order had started after a lapse of period of more than 14 years from the passing of the original assessment order. On the present facts the assessee s bonafide is liable to be accepted for the reason that the accounting period for the assessment years 1988-89 and 1989-90 had overlapped and assessment year 1989-90 being the transition period (because the accounting period in most of the cases was for more than 12 months), such claim for deduction cannot be adversely viewed, whether it should be treated as allowable in the assessment year 1988-89 or in the A.Y. 1989-90. The ambiguity with regard to the year of allowability of expenses for such a transition period should not be adversely viewed for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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