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TMI Blog2019 (5) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... losed all the particulars of claim not only in the statement of income but in the audited balance sheet and 3CD reports also. In respect of the capital work-in-progress and research and development expenses also all details have been filed by the assessee in notes to account annexed to balance sheet - HELD THAT:- We concur with the observation of CIT(A) that merely rejection of the claim may not invite the assessee to penalty under section 271(1)(c) of the Act. The Ld. DR could not controvert the observation of the Ld. CIT(A). In our opinion, the finding of the Ld. CIT(A) on the issue in dispute is well reasoned and we do not find any infirmity in the same and accordingly, we uphold the same. Accordingly, the ground of the appeal is dismissed. - Decided in favour of assessee. - ITA Nos. 5149 And 5150/Del/2016 - - - Dated:- 30-4-2019 - Shri Bhavnesh Saini, Judicial Member And Shri O.P. Kant, Accountant Member For the Appellant : Smt. Rinku Singh, Sr.DR For the Respondent : Shri Sumit Kumar Bansal, CA ORDER PER O.P. KANT, A.M.: These two appeals by the Revenue are directed against two sep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer which is a prerequisite to assume the jurisdiction for levy of the penalty. Aggrieved, the Revenue is in appeal before the Tribunal raising the grounds as reproduced above. 4. Before us, the Ld. DR relied on the order of the Assessing Officer and submitted that penalty has been levied in accordance with law. 5. On the contrary, the Ld. counsel of the assessee relied on the order of the Ld. CIT(A) and filed a paper-book containing pages 1 to 55. The Ld. counsel referred to the copy of the assessment order available on pages 1 to 8 of the paper-book and submitted that the Assessing Officer has not recorded its satisfaction in the assessment order to initiate the penalty proceedings under section 271(1)(c) of the Act. The Ld. counsel relied on the decision of the Tribunal in the case of Shambhu Dayal in ITA No. 3391/Del/2013 for assessment year 2006-07 to substantiate that in absence of any prima facie satisfaction recorded by the Assessing Officer for initiation of the penalty in the assessment order, the penalty levied by the Assessing Officer is without jurisdiction and void-ab-initio . 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actual observation that penalty under section 271(1)(c) of the Act was not initiated in the assessment order. The Ld. counsel also contended that no notice under section 274 read with section 271(1)(c) of the Act was issued along with assessment order, though the Assessing Officer has mentioned in the penalty order that such notice was issued. Before us, also no copy of such notice issued has been produced by the Revenue. We find that the Tribunal in the case of Shambhu Dayal (supra) relied on the decision of the Hon ble Delhi High Court in the case of Madhushree Gupta Vs. Union of India (2009), 317 ITR 107 (Del.). The relevant finding of the Tribunal is reproduced as under: 8. As we find that the Id. Assessing Officer has failed to record prima-facie satisfaction for initiate penalty proceeding in the assessment order passed under section 144 of the Act, respectfully following the judgment of the jurisdictional High court in the case of Madhushree Gupta( supra) and decision of the Tribunal Page 5 of 6 ITA No. 339i/Del/2()i3 in the case of Triveni Engineering and Industries Ltd. (supra), we hold that in absence of any prima-facie satisfaction recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer and submitted that penalty levied by the Assessing Officer might be upheld. 13. On the contrary, the Ld. counsel of the assessee filed a paper-book containing pages 1 to 259 and submitted that the Assessing Officer has recorded satisfaction for initiation of the penalty only in respect of the addition of ₹ 4,79,380/- under section 14A of the Act. Further, he referred to copy of notice dated 27/12/2010 issued under section 274 of the Act filed alongwith the written submission and submitted, that in the notice issued the relevant charge of concealment of particulars of income or furnishing inaccurate particulars of the income was not struck by the Assessing Officer. The Ld. counsel further relying on the order of the Hon ble Supreme Court in the case of CIT Vs. Reliance Petroproducts Private Limited, 322 ITR 158, submitted that merely because the assessee has claimed expenditure, which was not accepted that by itself, would not attract penalty under section 271(1)(c) of the Act. 14. We have heard the rival submission and perused the relevant material on record. The relevant finding of the Ld. CIT(A) deleting th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 4,79,380/- and that no such satisfaction has been recorded separately for other additions. This addition u/s 14A has been deleted by the CIT (A) hence no penalty is imposable. The Appellant has further argued that AO has gone through the facts of the case and the explanation made for each addition and after his application of his mind found that only in case of addition u/s 14A the incorrect particulars are furnished. No such satisfaction has been recorded for other additions. The present AO has imposed the penalty on all the additions as confirmed, whereas; the AO who passed the order had initiated the penalty for only for the addition made u/s 14A. The case of the appellant is that these additions are made or confirmed due to different legal interpretation otherwise, full particulars were disclosed in the return of income and the explanation as offered has not been properly appreciated and various case laws are not considered. Thus their case is fully covered by the Explanation 1 part (A) (B). The penalty has been imposed merely on the basis that additions have been confirmed. I have pursued the assessment order and find that the contention o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt have not been accepted by the AO. The appellant has proved that such claims were made under the bona-fide belief and also relied upon on various case laws where such claims are allowed. Keeping in view of the facts of the case and relying on the decision of the Hon'ble Supreme Court in case of Reliance Petro Products 322 1TR 158 and the decision of Oxford Softech Pvt. Ltd vs. ITO Ward- 13(l) vide ITA No. 5100/Del/2011, I hold that making a claim for the deduction under the bonafide belief, though the assessing authorities have found that the claim is not admissible, cannot be said that this is a case of furnishing of inaccurate particulars of income. In view of the discussions above, I hereby delete the penalty imposed under section 271(l)(c). 15. The Ld. CIT(A) has noted that out of the seven additions, five additions are related to the claim of depreciation or additional appreciation. The remaining two claims relate to disallowance of interest on capital work in progress and disallowance of research and development expenses. The Ld. CIT(A) pointed out that regarding the depreciation the assessee has fully disclosed all the particul ..... 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