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TMI Blog2016 (2) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... s filed an application raising additional substantial questions of law which was allowed on 05.06.2015 and accordingly, additional substantial questions 10 and 11 were raised by the assessee for consideration before this Court. Now, the relevant substantial questions of law which arises for consideration in this appeal reads thus: 1. Whether on the facts and in the circumstances of the case, the Honouable Tribunal was right in law in upholding the penalty levied under Section 271 (1) (c) although the notice was issued for levy of penalty under section 271 (1) (b)? 2. Whether on the facts and in the circumstances of the case, the Honourable Tribunal was right in law in upholding the penalty levied under section 271 (1) (c) when the Learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the parties. Being aggrieved, the revenue preferred an appeal before the ITAT which was allowed setting aside the order passed by the Appellate Commissioner and restoring the order of the Assessing Officer. Aggrieved by the same, the appellant is before this Court raising the substantial questions of law as stated above. 4. We have heard Sri A Chaitanya, learned counsel appearing for the appellant and Sri Jeevan J Neeralgi, Learned counsel appearing for the revenue. 5. The learned counsel appearing for the assessee placing reliance on the notice issued under Section 274 read with Section 271 of the Act dated 30.08.2006 would contend that the said notice proposes to levy penalty under Section 271(1)(b), the particulars of which reads thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 271(1)(c) of the Act. According to him, the assessee has not concealed the particulars of his income or furnished inaccurate particulars of such income. It was made clear in the return submitted by the assessee that the assessee has claimed an amount of Rs. 28,40,409/- as loss on investment under financial expenses. The Assessing Officer based on the declaration made in the return, held that expenditure claimed by the assessee as revenue is capital in nature and therefore, disallowed the deduction while computing the income. In such situation, the Assessing Officer levying penalty under Section 271(1)(c) is contrary to the tenor of the provision which attracts only in cases of concealing of income or filing of inaccurate part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es' to evade the payment of tax, has upheld the penalty order passed by the Assessing Officer setting aside the order of the Appellate Commissioner in appeal . He seeks to confirm the order passed by the ITAT answering the questions of law in favour of the revenue and against the assessee. 7. Having heard the learned counsel appearing for the parties and perusing the material on record, it is clear that the assessee has filed the return of income claiming certain deductions as revenue expenditure disclosing the same under the head 'financial expenses' in the return of income filed by him. This return was taken for scrutiny and after adjudication, the Assessing Officer has held that the claim made by the assessee as revenue expenditure is c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income filed by the assessee. If so, there was no occasion for the Assessing Officer to come to a conclusion that there was concealment of the income by the assessee or the assessee has filed inaccurate particulars. The very particulars were available in the return of income. 8. Thus, it clearly indicates that the Assessing Officer had no jurisdiction to pass the penalty order under Section 271(1)(c) of the Act without issuing a proper notice as required under law and moreover, when the particulars are disclosed in the return of income. 9. The Judgment of Manjunath Cotton and Ginning's case (supra) is squarely applicable to the facts of the present case wherein, it is held that the levy of penalty is not automatic concomitant of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. No direction is coming forth in the assessments order for levying penalty which is mandatory as per Section 271(1B) of the Act. Considering the relevant factors, appellate commissioner has rightly allowed the appeal of the assessee setting-aside the order passed by the Assessing Officer which has been reversed by the ITAT on the ground that the assessee deliberately evaded the payment of tax by declaring the capital expenditure as revenue expenditure in the 'financial expenses'. In our considered opinion, for the reasons stated above, the order passed by the ITAT is not sustainable. Accordingly, we set aside the order of the ITAT and restore the order passed by the CIT(A) answering the substantial questions of law in favour of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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