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TMI Blog2012 (7) TMI 1083X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961 (for short "the Act"), on account of various ad-hoc disallowances. 2. The relevant facts of the case are that the assessee is engaged in the business of manufacturing and trading in textile goods. The return of income was filed at a loss of ₹ 42,08,178, on 31st October 2001. During the course of the assessment proceedings, the assessee could not attend the proceedings and, accordingly, the Assessing Officer disallowed the entire loss claimed in the return of income and completed the assessment at nil income, vide order dated 20th October 2003. In pursuance of the assessment order, penalty proceedings under section 271(1)(c) of the Act was initiated. During t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f first appellate proceedings, it was submitted by the assessee that due to series of problems and the assessee's business was going through a very pad phase, requisite information before the Assessing Officer could not be furnished. However, it was submitted that even though the additions made in the assessment order has not been challenged, yet penalty for concealment of income on furnishing of inaccurate particulars of income cannot be levied as all the additions have been made purely on ad- hoc basis. The assessee's explanation has been given in Paras-9 and 10 of the order passed by the learned Commissioner (Appeals). The learned Commissioner (Appeals), however, confirmed the penalty, mostly on the ground that non-filing of details requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,500 and also unsecured loan of ₹ 74,000. Even though, such disallowances have attained finality in the quantum proceedings as no appeal has been preferred. However, for the purpose of penalty proceedings, such a finding cannot be held to be conclusive as all the relevant details are available in the audited balance sheet and there is no material on record to show that these expenses are bogus. Since most of the disallowance are ad-hoc in nature, we do not find any merit in the findings of the learned Commissioner (Appeals) in confirming the penalty. Mere disallowance of claim of expenses, penalty for concealment of income or furnishing of inaccurate particulars of income cannot be levied. The ratio and principles laid down by the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars. Decision of the Gujarat High Court affirmed. Dilip N. Shroff v. Joint CIT [2007] 291 ITR 519 (SC) and Sree Krishna Electricals v. State of Tamil Nadu [2009] 23 VST 249 (SC) relied on." 8. Thus, on the facts of the present case, penalty under section 271(1)(c) imposed by the Assessing Officer and confirmed by learned Commissioner (Appeals) is hereby deleted. 8. In the result, assessee's ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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