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TMI Blog2016 (7) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... ch situation certainly does not call for a penalty u/s 271(1)(c) of the Act. So, assessee cannot be held for furnishing inaccurate particulars. - Decided in favour of assessee - ITA No.2147/Ahd/2013 - - - Dated:- 1-6-2016 - Shri R. P. Tolani, JM, Shri Manish Borad, AM. For The Appellant : Shri P. F. Jain, AR For The Respondent : Shri B.P.K. Panda, Sr.DR ORDER PER Manish Borad, Accountant Member . This appeal of the assessee is directed against the order of ld. CIT(A) VIII, Ahmedabad, dated 11.7.2013 in appeal No.CIT(A)- VIII/ACIT/Cir.4/13/12-13 passed against order u/s 271(1)(c) of the IT Act, 1961 (in short the Act) for Asst. Year 2007-08 framed on 15.3.2012 by ACIT Circle-4, Ahmedabad. Assessee has raised following grounds of appeal :- 1. The ld. CIT(A) has erred in law and on facts in upholding the levy of penalty on the disallowance of ₹ 9,59,886/- being amount spent on cables on the ground of furnishing inaccurate particulars of income without property appreciating the facts of the appellant. 2. On facts of the appellant no such penalty ought to have been levied. 3. The appellant craves leave, to add to alter and/or modify any ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in May 2006. The CIT(A) upheld the addition made by the A.O and accordingly the penalty has been imposed by the A.O . It has been explained by the appellant that the above expenditure could not be capitalized as there was time lag of 6 months between the date of production and the appropriation of the expenses out of the deposits. There was an inadvertent error of not including it in preoperative expenses. The appellant during the appellate stage for the quantum proceedings claimed that since it was not in the owner of the P M it should be taken as a revenue expenditure. The appellant has further submitted that the mistake was a bonafide one. The fact remains that the expenditure pertain to the period prior to commencement of production and therefore, irrespective of the nature of expenditure that is capital or revenue, it has to be capitalized in the books of account and the appellant should have claimed depreciation on the same. Therefore, there is an incorrect claim made by the appellant which has resulted into concealment of income. The claim is exfacie not admissible. The issue is now to be analyzed from the point whether there was a bonafide mistake or reasonable ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, it cannot be held to be concealment of income and no penalty cannot be imposed for the same. The penalty imposed by the A 0 on this issue therefore, directed to be deleted. 5. Now the assessee is in appeal before the Tribunal against the order of ld. CIT(A) confirming penalty u/s 271(1)(c) of the Act for claiming expenditure of ₹ 959,886/- relating to laying of cable as revenue expenditure and not capital expenditure. 6. Ld. AR submitted that the payment of ₹ 959,886/- was made to Dakshin Gujarat Vij Company Ltd. .(DGVCL) for laying cables for 950 KVA transformers and claimed as revenue expenditure because DGVCL is open to use the transformer, cables, accessories etc. situated at assessee s premises for supplying of electricity to other customers and payment made by the assessee to DGVCL is merely contribution of the total cost on transformer. He further submitted that there is a clear stipulation evidencing the ownership and liberty of DGVCL regarding the use of transfer for supplying electricity to other customers. Therefore, as the ownership is not vested with the assessee but to DGVCL it was claimed as revenue expenditure. However, the lower authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance on the decision of Hon. Supreme Court in the case of CIT vs. Reliance Petro Products Pvt. Ltd. (supra) wherein it has been held that if information given in return is not found to be incorrect, simply by making incorrect claim, it does not amount to concealment of particulars. By no stretch of imagination making an incorrect claim tantamounts to furnishing inaccutate particulars. When the details supplied by the assessee in the return are not found to be incorrect or erroneous or false, there is no question to invite penalty u/s 271(1)(c). A claim which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars of income by the assessee. 12. We further observe that ld. DR referred and relied on the decision of Hon. Delhi High Court in the case of CIT vs. Zoom Communication ITA No.07/2010 dated 24.5.2010 wherein the Hon. Court has distinguished the case before them with the facts in the case of Reliance Petro Products Pvt. Ltd. (supra) and has observed as under :- 21. We find that the assessee before us did not explain either to the Income Tax Authorities or to the Income Tax Appellate Tribunal as to in what circumstances and on accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in which such a deduction is claimed, coupled with as to whether the explanation offered by the assessee for making the claim, is shown to be bonafide or not. 24. For the reasons given in the preceding paragraphs, we answer the question of law framed in this case in favour of the revenue and against the assessee. The Income Tax Appellate Tribunal erred in law in deleting the penalty in respect of the amount of Rs.i lakh claimed as deduction on account of payment of income tax and the amount of Rs.i3,24,539/- debited under the head equipment written off, in the Profit and Loss Account of the assessee. The appeal stands disposed of accordingly. 13. From going through the decision referred and relied by the ld. DR we observe that the issue in that case related to claim of incometax paid as revenue expenditure and write off of ₹ 1324539/- under the head equipment and for making such incorrect claim penalty imposed u/s 271(1)(c) of the Act was confirmed. However, we observe that the facts of the case in the appeal before us are fairly different because at the time when the expenditure of ₹ 959886/- was booked in the books as revenue expenditure the assessee was havi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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