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TMI Blog2013 (9) TMI 1080X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee is in the business of import of steel. As part of that it seems, he spent an amount of ₹ 92,092/- as sales promotion and transport expenditure on Mr. John and claimed as business expenditure. AO treated it as personal expenditure. Just became a claim was made and AO made disallowance, the same may not lead to levy of penalty u/s. 271(1)(c). There is bona fide belief in making the claims - Decided in favour of assessee - ITA No. 4886/Mum/2012 - - - Dated:- 17-9-2013 - SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER For the Respondent : Shri C Srinivas Reddy O R D E R PER B. RAMAKOTAIAH, AM: This is an Assessee appeal against the order of the Ld.CIT(A) -26 Mumbai dt.07.06.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nishing inaccurate particulars i.e. claim of business expenses which in fact, is a personal expense, the assessee is liable for levy of penalty u/s 271(1)(c) r.w. explanation I(A) of Section 271(1)(c). Accordingly, he has levied 100% penalty of the tax sought to be evaded. 3. Before Ld. CIT(A) assessee made detailed submissions as under:- (i) Whether disallowance of expenses clearly disclosed in the accounts amounts to concealment or filing of inaccurate particulars ? A mere disallowance of expenses in the assessment proceedings does not amount to concealment or filing of inaccurate particulars. In the present case, the Assessing Officer has not disputed that the expenses has not been incurred. The Assessing Officer has disallowed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. Therefore, the disallowance of such claim which has not been persuaded by the Assessee in the appellate proceedings, cannot amount to concealment or filing of inaccurate particulars. Similarly expenses incurred on Mr. John, a foreign citizen, who visited India in relation to business connection, for which all the relevant documents were produced before the Assessing Officer, cannot lead to a conclusion that expenses are bogus and claimed only with a purpose to defraud the Revenue. Both these expenses were claimed under a bonafide belief. (iv) Decision of Supreme Court in the case of Reliance Petroproducts Pvt. Ltd. The Hon ble Supreme Court in the case of Reliance Petroproducts Pvt. Ltd. (322 ITR 158) has clearly laid down the ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed not on the ground that details furnished by the Assessee was not correct but it was disallowed on other reasons. Therefore, the legal claim even if it is ultimately found to be unacceptable, cannot amount to furnishing of inaccurate particulars. The Tribunal has also discussed in detail the deeming fiction of explanation (1) to section 271(1) (c) and then come to a conclusion that under section 271 (1)(c) a legal claim made in the return and which was disallowed during the course of assessment, cannot amount to filing of inaccurate particulars (vi) VIP Industry Ltd. (30 SOT 254)(Mum) Your Honour s attention is also invited to the decision of the Mumbai Tribunal in the case of VIP Industries Ltd. (30 SOT 254) where the Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f inaccurate particulars. (x) Assessment proceedings and penalty proceedings are separate. It is a settled law that assessment proceedings and penalty proceedings are separate and independent of each other. Therefore, the penalty is not automatic. In other words, every disallowance cannot be a subject matter of penalty even if the disallowance is confirmed by the higher authorities. In all the above cases and there are umpteen number of more cases, the additions even confirmed by the higher authorities but penalty levied by the Assessing Officer, do not find favour of the appellate authorities. Therefore, mere disallowance made in the assessment proceedings and which is confirmed by the CIT(A), cannot be a sole criteria for levying pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eel. As part of that it seems, he spent an amount of ₹ 92,092/- as sales promotion and transport expenditure on Mr. John and claimed as business expenditure. AO treated it as personal expenditure. Just became a claim was made and AO made disallowance, the same may not lead to levy of penalty u/s. 271(1)(c). There is bona fide belief in making the claims. The principle laid down by the Hon ble Supreme Court in the case of M/s. Reliance Petroproducts Pvt. Ltd. (322 ITR 158) do apply to this case. Mere disallowance of claims made does not lead to levy of penalty for furnishing inaccurate particulars. Therefore, we cancel the penalty. 7. In the result, assessee appeal is allowed. Order pronounced in the open court on 17th September, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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