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TMI Blog2015 (5) TMI 1146X X X X Extracts X X X X X X X X Extracts X X X X ..... ase : i) Addition on account of freight inward and outward u/s 40(a)(ia) Rs. 28,96,304/- ii) Addition on account of freight outward on payment made to M/s Gati Ltd. u/s 40(a)(ia) Rs. 63,447/- iii) Addition on account of repair and maintenance of cars u/s 40(a)(ia) Rs. 1,94,593/- iv)Addition on account of stitching of uniforms etc u/s40(a)(ia) Rs. 5,82,625/- v) Addition u/s40A(3) Rs. 18,297/- vi) Addition on account of disallowance u/s 80IC on re-allocation of expenses Rs. 28,63,569/- vii) Addition on account of interest capitalised Rs. 10,355/- (2053 + 8302) (viii) Addition on account of interest debited to Derra Bassi unit - treated as relating to Baddi Unit Rs. 1,42,520/- 3. The Assessing Officer had initiated pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty for concealment of the entire addition confirmed by the Tribunal. The assessee relied upon decision of the Hon'ble Supreme Court in the case of M/s Reliance Petroproducts Pvt. Ltd. 332 ITR 158, decision of Hon'ble Punjab & Haryana High Court in the cases of M/s Sidharath Enterprises 322 ITR 80 and M/s Haryana Warehousing Corporation 314 ITR 215. 5. The ld. CIT(Appeals) considering submission of the assessee, cancelled the penalty. His findings in para 5 & 6 of the appellate order are reproduced as under: "5. I have considered the submission of the Ld. Counsel. As per the provisions of section 271(l)(c), penalty can be levied, if the assessee has concealed particulars of his income or furnished inaccurate particulars of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king provisions of section 40(a)(i) cannot be a ground to levy penalty u/s 271(l)(c) since in such situations, it cannot be said that the assessee had failed to disclose fully and truly all material facts relevant to the deduction claimed by the assessee. Section 40(a)(i) pertains to payments made to non-residents and the corresponding provision for residents is section 40(a)(ia) and so the ratio of this decision is applicable in respect of disallowance u/s 40(a)(ia) also. Further, the entire amount has been added u/s 40(a)(ia) for non-deduction of tax and the appellant has already been penalized by adding whole of the amount, on which tax was to be deducted. By respectfully following the decision of Hon'ble ITAT Delhi (supra), the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He has also filed order of the Hon'ble Punjab & Haryana High Court in the case of the same assessee for assessment year under appeal to show that the appeal of the assessee has been admitted against quantum addition by Hon'ble Punjab & Haryana High Court on substantial questions of law. He has, therefore, submitted that since appeal of the assessee is pending before Hon'ble High Court, therefore, claim of assessee is bonafide and penalty has been correctly cancelled. 8. We have considered the rival submissions and material available on record. The issue involved in the appeal is regarding cancellation of penalty on addition made on account of disallowance of expenditure under section 40(a)(ia) of the Act. The assessee has disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Revenue to inflict any penalty on the assessee." 9. The ld. CIT(Appeals) considering the material on record correctly followed the decision of the Delhi Bench in the case of AT&T Communications Services (India) Pvt. Ltd. (supra) for canceling the penalty against the assessee. The assessee made a bonafide claim of deduction of the expenditure even though it was not acceptable to the revenue, would not lead to inference that assessee has concealed the particulars of income or filed inaccurate particulars of income. Nothing is brought on record if claim of assessee was incorrect in law or was malafide. Therefore, decision relied upon by ld. DR is not applicable to the facts of the case. 10. Considering the above discussion, in the light ..... X X X X Extracts X X X X X X X X Extracts X X X X
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