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TMI Blog2015 (8) TMI 840X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the AO were not genuine as there is no finding by the AO that these bills/vouchers were not genuine and no inquiry has been made at the end of the AO. Therefore, we are of the view that this is not the case were penalty deserves to be sustained. We therefore accordingly direct the AO to delete the penalty. As a result, ground raised by the assessee is allowed and appeal of the assessee for AY 2005- 06 is allowed. - Decided in favour of assessee. Penalty u/s.271(1)(c) - disallowance made u/s.40(a)(ia) - Held that:- As relying on Commissioner of Income-tax-IV Versus LG Chaudhary [2013 (8) TMI 192 - GUJARAT HIGH COURT] wherein held CIT(A) and ITAT have rightly deleted the penalty observing that the disallowance was due to non-payment of TDS, which was at the most a technical default. There being nothing to indicate any concealment of the income or furnishing of inaccurate particulars of income by the assessee, the Assessing Officer was rightly not justified in levying the penalty. - Decided in favour of assessee. - I. T. A. No.2572, 2573 , 2574 /Ahd/2011 - - - Dated:- 14-8-2015 - SHRI PRAMOD KUMAR AND SHRI KUL BHARAT, JJ. For The Appellant : Shri Parin S. Shah, AR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charges repairs, etc. Aggrieved by the order of the ld. CIT(A), the assessee is now in appeal before us. 4. The ld. Counsel for the assessee submitted that the authorities below were not justified in levying the penalty. He submitted that all the details were placed before the AO during the course of assessment proceedings. He submitted that it is not the case of furnishing inaccurate particulars of income or concealment of income. He submitted that the ld. CIT(A) has confirmed the penalty on two additions; i. E. ₹ 7,000/- made on account of cash credit and disallowance of ₹ 49,834/- treated as the capital expenditure by the AO. He submitted that the penalty levied on cash credit is not sustainable. He placed reliance on the judgement of Hon ble Jurisdictional High Court rendered in the case of National Textiles vs. CIT reported at (2001)249 ITR 125 (Guj.) and judgement of Hon ble Apex Court rendered in the case of CIT vs. Reliance Petroproducts (P) Ltd. reported at (2010) 322 ITR 158 (SC). 4.1. The Sr. DR supported the orders of the authorities below and submitted that there is no illegality in the orders of the authorities below. 5. We have heard the rival ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at amount of ₹ 8350 was spent on purchase of energy saver kit which was a new item. Similarly amount of ₹ 31044 was spenton purchase of a CPU, motherboard, RAM, hard disk, keyboard, mouse,Cabinet, Lan card and floppy drive. From the items purchased it is clear that a new assembled PC was purchased by the appellant. Amount of ₹ 7,308/- was spent towards purchase of PVC carpet and amount of ₹ 3,200/- was spent as the repair and fitting charges for carpet. It is very clear from these details that except for a small and unspecified amount spent for the repair the rest of the expenditure was made for acquiring new capital assets. The explanation of the appellant before the AO that the computer parts were purchased for the purpose of repair of existing computers in future is not bonafide. The appellant has wrongly claimed a capital expenditure as the revenue one. In view of these facts, it is very clear that provisions of explanation 1 to section 271(l)(c) of the IT Act are clearly applicable to the case of the appellant. So far as case laws quoted by the appellant in its submission are concerned facts in those cases are found to be different. In this case clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d ITAT in its decision in the case of Gujarat State Financial Corporation has held as follows: It is well established that so long as the assessee has not concealed any material fact or the factual information given by him has not been found to be incorrect, he will not be liable to imposition of penalty under section 271(1)(c) of the Act, even if the claim made by him is not sustainable in law, provided that he either substantiates the explanation offered by him or the explanation, even if not substantiated, is found to be bona fide. If the explanation is neither substantiated nor shown to be bona fide, Explanation 1 to section 271(1)(c) would come into play and the assessee will be liable to for the prescribed penalty. It is true that mere submitting a claim which is incorrect in law would not amount to giving inaccurate particulars of the income of the assessee, but it cannot be disputed that the claim made by the assessee needs to be bona fide. If the claim besides being incorrect in law is mala fide, Explanation 1 to section 271(1) comes into play and work to the disadvantage of the assessee. In the present case, despite the fact that provision for bad and doubtful debts was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for bad and doubtful debts and provisions for diminution in value if investments were claimed in flagrant violation of provisions of law. In these circumstances, especially when explanation given by the assessee during the penalty proceedings has not been substantiated nor found to be bona fide and there is no material before us to take a different view in the matter, we are of the opinion that the Id. CIT(A) was justified in upholding the levy of penalty on account of furnishing of inaccurate particulars of income in relation to provision for bad and doubtful debts and provision for diminution in the value of investments. Since the appellant has claimed deduction of ₹ 49,834/- as revenue expenditure, which in fact is a capital expenditure and there are no two opinions about disallowability of the deduction claimed and he has also failed to offer a bona fide explanation for the default of claiming wrong deduction, provisions of explanation 1 to section 271(1)(c) of the I. T. Act,1961 are clearly applicable to the case of the appellant. In view of these facts it is held that the AO was justified in levying penalty under section 271(1)(c) of the I. T. Act,1961 for concealme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 24,600/-. The ld. Counsel for the assessee submitted that in the quantum proceedings, the AO made disallowance in respect of the difference between in the Profit Loss A/c. filed along with the original return and in the revised return. The explanation given by the assessee was not found acceptable by the AO and he made addition. He submitted that under the facts of the present case, the penalty ought not to have been levied as the assessee had given plausible explanation. The ld. Counsel for the assessee has placed reliance on the judgement(s) of Hon ble Jurisdictional High Court rendered in the case of CIT vs. Navnitlal Pochalal reported at (1995) 213 ITR 69 (Guj.), Hon ble High Court of Punjab Haryana rendered in the case of CIT vs. Ajab Singh Co. reported at (2002) 253 ITR 630 (P H) and Hon ble Apex Court rendered in the case of CIT vs. Reliance Petroproducts (P) Ltd. reported at (2010) 322 ITR 158(SC). 8.2. On the contrary, ld. Sr. DR supported the orders of the authorities below and vehemently argued that the assessee failed to give a plausible explanation in respect of the difference between in the Profit Loss account filed along with the original return and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 750 Copy of bills is enclosed. Paid by cash for office stationary. Repairs Maintenance (Electrical) 15.04.04 Gopalbhai - 4500 Copy of vouchers is enclosed. Cash paid for electrical repair. 26.06.04 Gopalbhai - 5500C 15.10.04 Gopalbhai - 4500 21.03.05 Gopalbhai - 5500 3.1. The submission of the assessee has duly been taken into consideration, but the same is not found to be tenable. The assessee has failed to furnish any convincing reply except stating the reasons mentioned above. There is no merit in the case of the submission made by the assessee ad it is only an after thought to claim these expenses at the time of filing the revised return. Accordingly, the sum of ₹ 80,361/- is added to the total income of the assessee. Penalty proceedings u/s.271(1)(c) of the I. T. Act has also been initiated separately on this point. 9.1. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding by the AO that these bills/vouchers were not genuine and no inquiry has been made at the end of the AO. Therefore, we are of the view that this is not the case were penalty deserves to be sustained. We therefore accordingly direct the AO to delete the penalty. As a result, ground raised by the assessee is allowed and appeal of the assessee for AY 2005- 06 is allowed. 10. Now, we take up the assessee s appeal in ITA No.2574/Ahd/2011 for AY 2006-07. The assessee has raised the following ground(s) of appeal: 1. Ld. CIT(A) erred in law and on facts in confirming penalty levied by AO u/s.271(1)(c) of the Act on addition of unexplained credits/disallowance of certain expenditure and on difference in the amount of taxable income as per original return and revised return filed by the appellant that is wholly unsustainable in law and on facts. Both the lower authorities failed to appreciate the fact that the Appellant neither furnished inaccurate particulars nor concealed any income. The penalty levied being without any merits and justification deserves to be quashed. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance as has been confirmed by both CIT (Appeals) and ITAT and therefore, the imposition of penalty by Assessing Officer was just and proper. Per contra, learned senior counsel submitted that none of the elements of Section 271(1)(c) get attracted in case of the respondent assessee. On due consideration of the submissions of both sides and on examining the orders of all the authorities, we find no reason to interfere in this appeal in as much as both the authorities namely C1T(A) and IT AT have rightly deleted the penalty observing that the disallowance was due to non-payment of TDS, which was at the most a technical default. There being nothing to indicate any concealment of the income or furnishing of inaccurate particulars of income by the assessee, the Assessing Officer was rightly not justified in levying the penalty. 4. This being a correct approach adopted by both the authorities concurrently, this tax appeal poses no question of law and the same requires no interference and is consequently to be dismissed. 13. Therefore, respectfully following the judgement of Hon ble Jurisdictional High Court, we hereby direct the AO to delete the penalty on this amount. Thus, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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