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TMI Blog2021 (3) TMI 167X X X X Extracts X X X X X X X X Extracts X X X X ..... r furnished inaccurate particulars of income and on the basis of such satisfaction a show cause notice has to be issued u/s 274 of the Act to the assessee specifying the addition/ disallowance in respect of which penalty is sought to be imposed and also the precise charge/ ground on which penalty is proposed to be imposed thereon. The particulars of expenses have been duly provided in the P L account and has also provided the basis of apportionment of these expenses. Hence, it cannot be said that the assessee has furnished inaccurate particulars of income . The disallowance made by the Assessing Officer cannot be treated as concealment too. Mere disallowance of an expense cannot lead to levy of penalty u/s 271(1)(c). This is not a f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld. CIT(A), erred in law in upholding the penalty levied on ad-hoc disallowance, upheld by the ld. CIT(A), in the quantum appeal. 3. That the order dated 31.08.2017 of the ld. CIT(A) passed u/s 250(6) of the Act is bad in law. 3. In the P L A/c, the assessee has credited the various incomes including the amount of interest income of ₹ 1,23,72,496/- and has debited following expenditure: Loss from sale of units of mutual funds ₹ 33,48,676/- Provision for diminution/(gain) in value of investment ₹ 19,296/- Donation ₹ 50,00,000/- Legal professional ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly and exclusively for the earning of such income in terms of Section 57(iii) of the Income Tax Act, 1961. In support of its claim, the assessee relied on the following decisions: CIT vs. Taj International Jewellers (2011) 335 ITR 144 (HC) CIT vs. New Savan Sugar and Gur Refining Co. Ltd. 185 ITR 564 (HC) CIT vs. Trustees of the Nizam Misc's Trust 160 ITR 253 (AP). 8. It was argued that since the expenses incurred and claimed as deduction u/s 57(iii) of the Act, as per the Computation of Income enclosed are primarily, relating to running and administering the assessee firm, the same are allowable as deduction u/s 57(iii) of the I. T. Act, 1961. 9. The Assessing Officer held that as far as the claim of expenditu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osit with ICICI Bank and loan given to Shri Dhiraj Sarna Shri Shakti Singh @ 4% P.A. and the 'service charges' 'maintenance expenses' have been incurred in connection with overall establishment of the assessee firm. 10. The AO held that as per the above condition required for al lowing deduction u/s 57 of the Income-tax Act, 1961 on the expenditure of 'service charges' 'maintenance expenses' has not been incurred in connection with making investment in deposit with ICICI bank or loan / advance given to Shri Dhiraj Sarna Shri Shakti Singh and disallowed the expenditure. 11. The revenue relied on the case of CIT v. Gopinathan (Dr. V.P.) (1998) 229 ITR 801 (Ker), wherein it was held that the taxing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nitiated. Notice u/s 271(1)(c) read with Section 274 of the Act is being issued separately. 14. We have gone through the penalty order wherein the penalty of ₹ 3,21,013/- has been levied by the Assessing Officer. 15. Para no. 5 of the penalty order reads as under: 5. Since, prima facie, provisions of Section 271(1)(c) were attracted, after recording satisfaction of AO in assessment order CIT(A) order penalty proceedings u/s 271(1)(c) were initiated for concealing particulars/ submitting inaccurate particulars on account of disallowance on income from other sources under Sec. 57 thereby concealing income vide assessment order dt. 29.03.2013 and CIT(A) order dt. 21.05.2014, notices u/s 274 r.w.s. 271(1)(c) of the IT Act w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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