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TMI Blog2015 (5) TMI 424X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO. Therefore, only on this basis that the claim in full was not accepted by the AO, it cannot be said that the assessee concealed the particulars of his income or furnished inaccurate particulars of his income. As such the penalty u/s 271(1)(c) of the Act was not leviable. - Decided in favour of assessee. - ITA No. 6000/Del/2010 - - - Dated:- 27-4-2015 - Sh. N. K. Saini, AM And Sh. A. T. Varkey, JM,JJ. For the Petitioner : Sh. Salil Kapoor, Adv. Sh. Sanat Kapoor, Adv. For the Respondent : Sh. P. Dam Kanunjha, Sr. DR ORDER Per N. K. Saini, AM: This is an appeal by the assessee against the order dated 27.10.2010 of ld. CIT(A)-XXIII, New Delhi. 2. Following grounds have been raised in this appeal: 1. That the Authority below has erred both in law in imposing penalty u/s 271(1)(c) of I. T. Act amounting to ₹ 10,89,123/- 2. That the authority below has failed to consider that mere disallowance claim of interest does not tantamount to concealment of particulars/income. 3. That the appellant reserves its rights to amend, alter or raise any other additional grounds of appeal before or during the course of appellate proceedings. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arning the income that has been subjected to tax and the dominant purpose of the expenditure incurred must be to earn such income. A reference was made to the following case laws: Smt. Virmati Ramakrishna Vs CIT 131 ITR 659 (Guj.) CIT Vs Sponge Iron India Ltd. (1992) 201 ITR 770 (AP) Venkestwara Real Estate and Enterprise Ltd. Vs CIT 151 ITR 729 (Karnataka) Smt. Slandamma Vs CIT 164 ITR 446 (Karnataka) 4. The AO asked the assessee to establish the nexus between the loans received and the loans given. In response, the assessee furnished copies of ledger accounts of respective concerns and claimed that the funds were arranged from various companies to whom interest had been paid, as well as the amount had been forwarded to the companies from whom the interest had been charged. The AO observed that the details furnished by the assessee revealed that the utilization of interest bearing loans towards extension of interest bearing advances to a certain extent which were not for the year under consideration but also pertained to Financial Years 2005-06 and 2004-05. The AO noticed that the total interest bearing loans which could have been held to have nexus with the loans a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e quantum addition in para 2, submissions of the assessee in penalty proceedings and the conclusion of the AO in paras 3 4 respectively of the impugned order. Thereafter in paras 5 6 of the impugned order the ld. CIT(A) made his observations and confirmed the penalty as under: (5) I have considered the facts of the case and the basis of Assessing Officer to consider this a fit case for imposition of penalty under section 271(l)(c). The Authorized Representative of the appellant has relied upon the judgment of Apex Court in the case of CIT Vs Reliance Petroproducts Pvt. Ltd. 322 ITR 158. The Apex Court has held A glance at the provision of section 271(1)(c) would suggest that in order to be covered, there has to be concealment of the particulars of income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of income. Present is not the case of concealment of the income. That is not the case of Revenue either. As per Law Lexicon, the meaning of the word 'particular' is a detail or details (in plural sense); the details of a claim, or the separate items of an account. Therefore, the word 'particulars' used in s. 271(1)(c) would e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied; Reliance Petroproducts (P) Ltd. (judgment dated 23rd October, 2007 of the Gujarat High Court in Tax Appeal No. 1149 of 2007) affirmed. (6) It is a question of fact whether there is a nexus between the interest paid and interest earned and the assessee was in the knowledge of the same at the time of filing of return of income. The Assessing Officer conducted intensive examination of various loans raised and given and utilization thereof to prove that there was no nexus between the interest debited and interest earned. It is riot a case where the assessee has made a legal claim and same has been disallowed instead the assessee has made a factually wrong claim by claiming an expense of interest which has not been incurred for earning the income under section 57. The assessee has also not submitted any logical explanation for doing same in the penalty proceedings. The primary onus is on the assessee to prove that inaccurate particulars have not been filed' or there is no concealment of income and this has not been discharged by the assessee. His reliance on Apex Court s judgment quoted above is misplaced as in this there is no legal disallowance. The Assessing Officer has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 271(1)(c) of the Act was not leviable. The reliance was placed on the judgment of the Hon ble Delhi High Court in the case of AT T Communication Services India (P) Ltd. Vs DCIT (2010) 42 DTR 22. It was further stated that in subsequent year also similar addition was made but the penalty proceedings u/s 271(1)(c) of the Act were dropped. Accordingly, it was submitted that the ld. CIT(A) was not justified in confirming the action of the AO for imposing the penalty u/s 271(1)(c) of the Act. 10. In his rival submissions the ld. DR strongly supported the order of the authorities below and further submitted that the assessee concealed the income which was clear from this fact that no appeal was filed against the addition made by the AO which clearly established that the assessee himself admitted that the income shown by him was wrong. It was further stated that as per Explanation 1(b) to section 271(1)(c) of the Act, the penalty u/s 271(1)(c) of the Act was leviable to the facts of the present case and the ld. CIT(A) rightly confirmed the penalty levied by the AO. 11. We have considered the submissions of both the parties and carefully gone through the material available on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must not be accurate, not exact or correct, not according to the truth or erroneous. Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars. 13. From the ratio laid down by the Hon ble Supreme Court in the aforesaid referred to case it can be held that the penalty u/s 271(1)(c) of the Act was not leviable to the facts of the present case because the AO disallowed the claim of the assessee in part. In other words the AO estimated the interest payable on the loans @ 9% i.e. ₹ 37,87,200/- instead of actual amount paid at ₹ 70,22,831/-. However, all the particulars relating to the payment of interest were furnished to the AO., therefore, the penalty u/s 271(1)(c) of the Act was not leviable because the AO did not accept full claim of the assessee. In the present case, it is also notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iculars of income, but the final conclusion for levying the penalty was based on a different footing altogether, viz., on the footing of furnishing inaccurate particulars of income. Under the circumstances, it could not be said that the assessee had been given a reasonable opportunity of being heard before the order imposing the penalty was passed. The very basis for the penalty proceedings against the assessee initiated by the Income-tax Officer disappeared when the Appellate Assistant Commissioner held that there was no suppression of income by the assessee. The conclusion of the Tribunal that the Inspecting Assistant Commissioner had no jurisdiction to impose a penalty under section 271(1)(c) for concealment of income was correct. 16. In the present case also the AO in the course of assessment proceedings had not recorded any satisfaction while initiating the penalty proceedings, therefore, the penalty u/s 271(1)(c) of the Act was not leviable. In the present case, this contention of the ld. Counsel for the assessee that in the subsequent year similar claim was although disallowed but penalty proceedings were dropped was not rebutted. Therefore, on the identical facts in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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