9911796707
TMI Blog2015 (12) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 271(1)(c) of the Income Tax Act, 1961 (for short the Act ) for the assessment year 1990-91. 2. Brief facts of the case are assessee is a company. For the assessment year under consideration, assessee filed its return of income declaring total income of Rs. nil under the normal provisions and book profit of ₹ 13,88,82,280 under section 115J. The assessment in case of the assessee was completed under section 143(3) of the Act by determining the total income at Rs. nil after set-off of brought forward of business loss and unabsorbed depreciation under the normal provision and book profit of ₹ 15,31,42,900 under section 115J. While completing the assessment, the Assessing Officer made the following additions / disallowance:- Commission ₹ 34,13,738 Expenditure relating to issue of fully convertible debenture ₹ 25,96,19,969 Expenditure project not materialized ₹ 10,29,703 3. As it appears, the aforesaid additions made by the Assessing Officer were confirmed not only by the first appellate authority but also by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 93 and 1993-94, the Tribunal, Mumbai Bench, in assessee's own case has deleted the imposition of penalty under section 271(1)(c) on the basis of addition made on account of disallowance of commission payment on contract receipt from Government / PSU. In this context, he placed on record the order passed by the Tribunal in ITA no.3256-3258/Mum./2010 dated 21st October 2011. He further submitted, following the aforesaid decision, the Tribunal again in assessee's own case for the assessment year 1994-95, deleted the penalty imposed under section 271(1)(c) in its order passed in ITA no.1941/Mum./2011 dated 5th February 2015. He, therefore, submitted that as far as commission payment is concerned, there cannot be any imposition of penalty under section 271(1)(c). 5. As far as second addition relating to expenditure on issuance of convertible debenture the finding of learned Commissioner (Appeals) that it was for increasing the capital base of the company, hence, capital in nature, is totally incorrect. He submitted, even otherwise also whether a particular expenditure is revenue or capital is a debatable issue and more than one opinion is possible. He submitted that different ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Representative, on the other hand, relied upon the order of the authorities below. 8. We have heard Shri J.D. Mistry, learned Counsel for the assessee and Shri G.S. Rao, learned Departmental Representative. We have also perused the orders of the Departmental Authorities as well as other material placed on record. We have also carefully applied our mind to the decisions relied upon by the learned Counsel for the assessee. As far as the factual aspect is concerned, there is no dispute that the Assessing Officer while completing the assessment made three additions as referred to herein before and such additions were also confirmed by the Tribunal. However, the issue to be decided is whether merely because such additions made have been confirmed in appeal, it will automatically lead to imposition of penalty under section 271(1)(c) on the basis that assessee has furnished inaccurate particulars of income. As far as the commission payment is concerned, it is seen from record that the Tribunal has taken contrary view regarding allowability of commission payment. While in assessment year 1988-89, commission payment was allowed in the assessment year 1989-90 and 1990-91 they have been d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Moreover, as held by the Hon'ble Supreme Court in CIT v/s Reliance Petroproducts Pvt. Ltd. (supra), disallowance of a claim made by the assessee in the return of income by itself will not amount to furnishing of inaccurate particulars of income as allowability or disallowability of expenses has to be decided by the Assessing Officer in an assessment proceedings. By simply making a claim, the assessee does not automatically get entitled for the expenses. Having already held that in the particular facts and circumstances of the case, penalty is not imposable us 271(1)(c) on the basis of additions made, it will be pertinent to observe that questioning of law framed by the assessee relating to all the three additions on the basis of which penalty has been imposed, are admitted by the Hon'ble Jurisdictional High Court in an appeal preferred by the assessee under section 260A, registered as Income Tax Appeal no.741 of 2008. It needs to be noted, the Tribunal, Mumbai Benche, in Nayan Builders (supra) while examining the issue whether penalty under section 271(1)(c) can be sustained when the additions on the basis of which such penalty has been imposed are subject matter of appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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