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TMI Blog2017 (11) TMI 1544X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;). 2. Brief facts of the case are that the assessee is a firm of Advocates specialising in Intellectual Property Rights Laws and has its principal place of business in the NCR region of Delhi and Noida. In respect of the assessment year under consideration, the return of income was filed at Rs. 5,73,75,030/- which was assessed at Rs. 6,19,93,720/- and subsequently revised u/s 154 of the Income Tax Act, 1961 (hereinafter called 'the Act') to Rs. 6,22,28,729/-. The difference between the returned and assessed income arose on account of certain disallowances out of expenses against which the assessee filed appeal before the ld. Commissioner of Income Tax(A). Thereafter, both the assessee as well as the Department, filed second app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim that the cost of the transformer replaced by it was a revenue expenditure whereas the Department held it to be a capital expense and the same was upheld in appeal. 2. That the learned CIT (Appeal) erred in not holding that merely because the claim of the assessee was upheld against the assessee in appeals cannot presuppose that assessee concealed or filed inaccurate particulars of its income and more so when there have been instances in the past where replacement of transformer and similar machinery has been held to be a revenue expense. 3. That the order of the learned authorities below being contrary to the facts and circumstances of the case and in law the appeal be allowed." 3. The Ld. AR submitted that no penalty was leviab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd submitted that where the assessee had made a claim which was not only incorrect in law but was also wholly without any basis and further where the explanation furnished by the assessee for making such a claim was not bona fide, it would be difficult to say that the assessee would not be liable to penalty u/s 271(1)(c) of the Act. Ld. Departmental Representative submitted that the Hon'ble Delhi High Court has held in Zoom Communication Pvt. Ltd. (supra) that where a claim which is wholly untenable in law and has absolutely no foundation on which it could be made, not levying penalty would give licence to unscrupulous assessees to make wholly untenable and unsustainable claims. It was submitted that penalties have a deterrent effect an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer had added the same to the income. It is only a case where there is a difference of opinion as to a particular expenditure being revenue in nature or capital in nature. It is evident from the records that the assessee had given all particulars of expenditure and income and had disclosed all facts to the Assessing Officer. It is not the case where some new facts were discovered during the course of assessment proceedings or that the Assessing Officer had dug out some information which was not furnished by the assessee. The Mumbai Bench of ITAT in the case of Sadhana Textile Mills P. Ltd. in ITA No. 7681/Mum/2011 vide order dated 22.10.2012 had, on an identical issue, held that the assessee has a right to claim a particular expendit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into play and work to the disadvantage of the assessee. However, in the present appeal before us, there is no charge of any mala fide act against the assessee and the penalty has been imposed only on the basis of difference in opinion on the deductibility of a particular item of expenditure. Therefore, respectfully following the Hon'ble Apex Court in the case of Reliance Petroproducts Pvt. Ltd. (supra), we are unable to concur with the findings of both the lower authorities. We accordingly set aside the order of the ld. Commissioner of Income Tax(A) and direct the Assessing Officer to delete the penalty.
6. In the result, the appeal of the assessee stands allowed.
The order is pronounced in the open court on 31st October, 2017. X X X X Extracts X X X X X X X X Extracts X X X X
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