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TMI Blog2016 (10) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... , as the said amount was not expected to be recovered. The factum of investment and its write off was also completely disclosed before the AO in the financial statement furnished by assessee. However, on disallowance of this claim of assessee, it is not justified to hold that the appellant has concealed the particulars of income or has furnished inaccurate particulars of such income entailing penalty u/s. 271(1)(c) of the Act as held in several decisions relied by the assessee. In view of what has been discussed above, we come to the conclusion that the ld. Authorities below are not justified to impose or confirm the penalty against the assessee u/s. 271(1)(c) of the Act. - Decided in favour of assessee. - ITA No. 6123/Del./2013 - - - Dated:- 24-8-2016 - SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER For The Appellant : Sh. Ronak Doshi, C.A. For The Respondent : Ms. Anima Barnwal, Sr. DR ORDER Per L.P. Sahu, Accountant Member: This is an appeal filed by the assessee against the order of ld. CIT(A)- VIII, New Delhi dated 25.09.2013, New Delhi for the assessment year 2006-07 on the following grounds : GROUND I 1. On the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment decisions and miscellaneous legal issues, Consultancy in various shareholding related issues was also obtained from time to time and TDS was deducted on these charges. The AO disallowed these expenses u/s. 37(1) because it was not extended wholly and exclusively for the purpose of business or profession. The AO also found that the Company has claimed expenditure of ₹ 12,50,000/- on account of investments written off. In this regard, the assessee submitted as under : Company has charged an amount of ₹ 12,50,000/- towards write off of investment value as revenue expenditure. This was on account of investment turning zero in the share of Modi Creata Promotion Pvt. Ltd. The modi Creata Promotion Pvt. Ltd. has applied to the Registrar of Company for its name to strike off under section 560 of the Companies Act, 1956. If an expense is a capital expenditure, it needs to be capitalized; this requires the company to spread the cost of the expenditure over the useful life of the asset. If however, the expenditure/investment is not capable of generating any revenue or gets extinguished by sudden reasons, that results in sudden loss and the capital structure is impaired ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... printed format and has placed a tick mark on the paragraph have concealed the particulars of your income or furnished inaccurate particulars of such income in terms of explanation 1, 2, 3, 4 and 5 which shows that the notice did not spell out the charge against the assessee as to whether the assessee was guilty of having concealed the particulars of income or of having furnished inaccurate particulars of income. Reliance is placed on catena of decisions of various High Courts and Tribunals, inter alia, including the decision of Hon ble Karnataka High Court in the case of CIT vs. Manjunatha Cotton Ginning Factor reported in 359 ITR 565 (Kar.). On this aspect of the case, the ld. AR submitted that the penalty proceedings initiated by AO are not sustainable in the eye of law. 5.1 With respect to legal and professional fee paid to various professionals aggregating to ₹ 17,36,080/-, it was submitted that the same were duly disclosed in the books of account and the same have been paid by cheques to the consultants. TDS was also made on the payments of these professional fees. The bills of the legal consultants were also produced before the AO. Therefore, there being com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03 ITR 49 (Raj.) (ii). Oriental Power Cables Ltd. v. Inspecting AC,41 TTJ 225(Jaipur Tri) (iii). CIT vs. Sonth India Sugars Ltd., 275 ITR 491 (Mad.) Reliance is further placed on the following decisions for the proposition that mere change of head of income, as computed by assessee and as assessed by the department, no penalty can be levied on the same : (i). CIT vs. Amit Jain, 351 ITR 74 (Del.) (ii). CIT v. Harilal Doshi (ITA No. 2331 of 2013)(Bom. HC) (iii). DCIT vs. JMD Advisors (P) Ltd. (124 ITD 223)(Del. Trib.) 6. The ld. DR relied on the orders of the authorities below and submitted that the notice for imposing penalty u/s. 271(1)(c) read with section 274 is in standard format which has been prescribed by the Board. Moreover, the assessee has not raised this legal issue before the first appellate authority. The assessee has paid imaginary amounts for legal and professional charges for small services alleged to have been received. The appellant did not produce any agreement regarding type of services to be received and the terms of payments so that quantum of fee paid could be decided in view of the services rendered. It was submitted that no any business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, cannot be said to prove furnishing of inaccurate particulars of income where the assessee had made complete disclosure in respect of the claims so made in the return of income itself. For this, we stand fortified by the decision of Hon ble Apex Court in CIT vs. Reliance Petroproduct (P) Ltd., 322 ITR 158 (SC) and several other decisions of various courts as relied upon by the assessee, noted above. We further do not find any substance in the submission of the ld. DR that the assessee did not challenge the above additions before the Tribunal, for the reason that mere non-filing of quantum appeal against the disallowances so made does not ipso facto lead to levy penalty in view of the decisions in the case of Sir Shadi Lal Sugar General Mills Ltd. (supra) and other decisions as relied by assessee. The ld. DR could not be able to adduce any material on record contrary to the submissions of the assessee that mere change of head of income as computed by the assessee and as assessed by the Revenue, no penalty could be imposed as held by Hon ble Delhi High Court in the case of Amit Jain (supra) and Bombay High Court in CIT vs. Harilal Doshi (supra). In the present case the legal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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