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TMI Blog2015 (5) TMI 906X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, the impugned amount of consultancy fee was debited under the head of legal and professional expenses which was claimed as business expenditure under a bonafide belief that the expenditure was incurred for business and the same was allowable against the business income. However, during the quantum proceedings, the claim of consultancy fee was allowed against the income of capital gains instead of income from business. In this situation, we safely observed that the claim of the assessee was not disallowed and the same was allowed against the income of capital gains instead of business income and thus, it cannot be held that either assessee has furnished inaccurate particulars of income or had concealed particulars of its taxable income with an intention to evade tax. Thus respectfully follow the decision of CIT vs. Reliance Petro Products (2010 (3) TMI 80 - SUPREME COURT ), wherein held that merely because the assessee had claimed the expenditure which claim was not accepted or was not acceptable to the Revenue, that, by itself, would not attract penalty u/s 271(1)(c). However, in the present case, the claim of the assessee on both the counts was not dismissed at the thres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent and also subsequently during penalty proceedings. Therefore, the AO held that the assessee has deliberately furnished inaccurate particulars of its income with the intention to evade due taxes and the AO levied penalty of ₹ 33,81,821/- u/s 271(1)(c) of the Act vide order dated 20.03.2012. 5. Being aggrieved by the above penalty order the assessee preferred an appeal before the CIT(A) which was allowed by passing the impugned order and the AO was directed to delete the penalty. Now the Revenue Department is before this Tribunal in the second appeal with the sole ground as reproduced hereinabove. 6. We have heard argument of both the sides and carefully perused the relevant material placed on record. 7. The ld. Departmental Representative, supporting the penalty order, submitted that the assessee made a wrong claim by furnishing inaccurate particulars of its income and the income which was received as interest from fixed deposits was wrongly shown as business income. The ld. DR further contended that the assessee also claimed consultancy fee as business expenditure which was paid against capital gains income. Therefore, the AO was right in holding that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, such expenses cannot be allowed as business expenditure as the income from sale of shares was assessable under the head long term capital gain. The Assessing Officer held that since appellant has furnished inappropriate particulars of income, therefore, it is liable for penalty u/s 271(1)(c) of the I.T. Act. It is submitted by the appellant that it had shown interest income as business income in the AY 2004- 05 and 05-06 and same was assessed as business income. However, in the AY 2006-07 the Assessing Officer changed his view and assessed the interest income as income from other sources. In AY 2007-08 also the Assessing Officer followed his predecessors order and assessed the interest income of ₹ 72,08,432/- as income from other sources. The appellant had stated that it had a bonafide belief that interest income is assessable as business income, therefore, same was shown as business income during the year. It has stated that nothing has been concealed and everything was disclosed in the return of income. For the addition of ₹ 25,00,000/- made on account of disallowance of consultancy fee as business expenditure, it is submitted by the appellant that it h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on such issue penalty cannot be levied. Since the appellant has not concealed any income and did not make any claim which was ex-facie bogus, therefore, the case of the appellant cannot be covered under the provisions of section 271(1)(c) explanation-1(A). Hence, the penalty levied by the Assessing Officer was not justified and same is delelted. 10. In view of above, we are in agreement with the conclusion of CIT(A) that the appellant assessee had given all particulars of its income in the return of income and assessee did not conceal or suppress any fact relating to the income earned during the relevant financial year. The AO have not brought out any fact or allegation on record that the information given by the assessee in its return of income was either bogus or incorrect and hence the same is prescribed as correct which was not disputed by the AO. The CIT(A) also observed that the interest income received from fixed deposits was shown as business income on the basis of earlier years assessment orders under the bonafide belief that such income is assessable as business income which was treated by the AO as income from other sources instead of business income during the q ..... X X X X Extracts X X X X X X X X Extracts X X X X
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