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TMI Blog2017 (4) TMI 1446X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by the assessee has been denied, and that too, on the basis of non-compliance with Sec. 40(a)(ia) of the Act, which was only a technical default by the assessee. The discussion made by the CIT(A) clearly brings out that the attributes required for imposition of penalty u/s 271(1)(c) of the Act in the present case are missing and, therefore, the penalty has been rightly deleted by her. Accordingly, the order of CIT(A) is hereby affirmed and Revenue fails in its appeal. X X X X Extracts X X X X X X X X Extracts X X X X ..... within the meaning of Sec. 271(1)(c) of the Act qua the aforesaid disallowance and accordingly levied penalty of ₹ 14,34,660/- equivalent to 100% of the tax sought to be evaded on the impugned disallowance. The said penalty has since been deleted by the CIT(A) by making the following observations :- "5. I have carefully considered the facts relating to the levy of penalty as they emerge from the impugned order. 5.1 In the case of M/s Hindustan Steel Ltd Vs State of Orissa reported at 83 ITR 26 (SC), the Hon'ble Supreme Court held that penalty is to be applied on careful consideration of all facts and circumstances and not in a mechanical manner. The Apex Court stated as under: "An order imposing penalty for failure to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. In this regard, the Hon'ble Court held as follows: "A glance at the provision of s. 271(1)(c) would suggest that in order to be covered, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. Present is not the case of concealment of the income. That is not the case of the Revenue either. As per Law Lexicon, the meaning of the word "particular" is a detail or details (in plural sense); the details of a claim, or the separate i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be established by AO was whether there is contumacious conduct of assessee in concealing a particular fact for claiming a deduction for which it was not eligible or whether there is furnishing inaccurate particulars of income for which the assessee has a bonafide explanation or not? Mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding income of the assessee. 5.5 In the case of AT & T Communication Services India (P) Ltd reported at 18 Taxman 144, the Hon'ble Delhi High Court upheld the deletion of penalty u/s 271(1)(c) by the Tribunal. It was held that invoking provisions of section 40(a)(ia) should not be ground to levy penalty u/s 271(1)(c) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not eligible in view of the provisions of section 40(a)(ia) of the Act and for that reason, expenditure is disallowed. Penalty cannot be levied for mere making of a claim of the expenditure which is not sustainable and deletion of penalty by the CIT(A) is justified. We place reliance on the judgement of the Hon'ble Supreme Court in the case of CIT Vs. Reliance Petro Products (P) Ltd. (2010) 322 ITR 158 (SC). Accordingly the ground raised by the revenue holds no merit." 5.7 In the case of M/s Global Associates Vs ACIT in ITA No. 4819/Del/2012 vide order dated 28-06-2013, the Hon'ble Delhi Tribunal upheld the deletion of penalty u/s 271(1)(c) on technical/legal disallowances u/s 14A or 40(a)(ia) of the Act. 5.8 I have consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a claim made by the appellant being denied by the Assessing Officer and that too on account of non-compliance with the provisions of section 194A. Once all particulars relating to the income and expenditure have been disclosed before the Assessing Officer, the disallowance of the claim will by itself not be sufficient to attract penalty u/s 271(1)(c). 5.9 Therefore, in light of the above judgments and considering to the fact that all the material facts with regard to the disallowance made u/s 40(a)(ia) are duly disclosed by the appellant in his return of income filed, I find that the AO is not justified in the levy of penalty u/s.271(1)(c) of the Act. Accordingly, this ground of appeal is allowed." Against the aforesaid decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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