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TMI Blog2019 (1) TMI 1572X X X X Extracts X X X X X X X X Extracts X X X X ..... facts of the case are that the assessment was framed u/s.143(3) of the Act vide order dated 03.02.2014 showing total income at Rs. 14,82,53,110/- against the returned income of Rs. 14,71,33,110/-, hereby making addition of Rs. 11,20,000/- on account of disallowance of excess deduction claimed u/s.35DD of the Act. The said expenses claimed by the assessee were comprised of stamp duty and related expenses incurred for increase of authorised capital consequent to allotment of shares to shareholders of the demerged company M/s CMS Computers Ltd. and no new funds have been received by the assessee company and, thus, expenses were related to demerger of the company. As per the AO the said expenses were to be allowed in five solvent as per the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of which particulars have been concealed and, thus, justified in imposition of penalty. Third reason stated by the CIT(A) that the assessee has not disputed the disallowance before the appellate authority in previous as well as in current year and, therefore, it is presumed that the assessee has no objection for disallowance. The operative part of the order of the CIT(A) is reproduced as under :- "5. I have carefully considered the facts of the case and the submissions of the Id.AR. I have also gone through the decisions relied on by the AO and the Id.AR. The only dispute at the time of assessment was whether the expenditure incurred for increase of authorised capital of a demerged company is capital or revenue. The appellant has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es incurred for increasing the authorised capital, it is evident that there is violation of statutory provisions which clearly attracts penal provisions. Secondly, as per Explanation-1 of section 271(1)(c), any amount added/disavowed in computing the total income when compared to returned income, such an amount should be deemed to represent the income in respect of which particulars have been concealed. In other words penalty u/s 271(1)(c) will attract if there is a difference between returned income and assessed income, in the instant case such difference has arisen in the assessment due to the disallowance of Us. 11. 20, 000 which is 4/5 of Rs. 14 lakhs which was debited in the P&L account as revenue expenditure. Therefore, penalty u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a mechanical manner without specifying one of the two limbs on which the penalty was proposed to be levied and similarly in the penalty order both the limbs were specified which reflects a clear cut case of non-application of mind by the AO and mechanical application of law in imposing the penalty on the assessee. The case of the assessee is squarely covered by the decision of the Hon'ble Supreme Court in the case of Reliance Petroproducts (P) Ltd., 322 ITR 158(SC), wherein the Hon'ble Apex Court has held that a claim of expenses by the assessee in the books of accounts which is not accepted by the revenue will not attract the penalty. Besides, the case of the assessee is squarely covered by the decision of Hon'ble Karnataka High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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