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TMI Blog2021 (7) TMI 835X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Supreme Court in the case of Dharmender Textile [ 2008 (9) TMI 52 - SUPREME COURT] and Hon'ble Delhi High Court in the case of CIT vs. Zoom Communications Pvt. Ltd. [ 2010 (5) TMI 34 - DELHI HIGH COURT] by the A.O. are not at all relevant on the facts here. On the facts of this case, the aforesaid two Supreme Court s decisions referred by us are germane and applicable on all fours on the facts of this case. We agree with the ld. Counsel of the assessee that the ld. CIT(A) has made irrelevant observation in his appellate order, which are not only factually incorrect but have no relationship to the issue by way of penalty u/s.271(1)(c). This amply reflects lack of application of mind by the ld. CIT(A). Assessee has also further raised the ground that since the assessee has been made liable to pay tax only on book profit, the penalty u/s.271(1)(c) cannot be sustained with reference to addition in normal computation. For this proposition, he has relied upon the decision of Hon'ble Supreme Court in the case of Nalwa Sons Investment Ltd [ 2012 (5) TMI 150 - SC ORDER] and CBDT Circular in this regard. In our considered opinion, since we have already held on m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hile levying the penalty, the A.O. placed reliance on the decision of Hon'ble Supreme Court in the case of Union of India vs. Dharmendra Textile Processors [2008] 306 ITR 277 (SC), Mak Data Pvt. Ltd. vs. CIT and Hon ble Delhi High Court decision in the case of CIT vs. Zoom Communications Pvt. Ltd.(ITA No. 07/2010 dated 24.05.2010). 4. Upon the assessee s appeal, the ld. CIT(A) confirmed the order of penalty. While passing the order he did not deal with the issue in appeal or the fact of the case. Rather the gave a theoretical treatise to the provision of section 271(1)(c) and the meaning of word concealment. He also referred some issues which were not at all arising in this appeal. 5. Against this order, the assessee is in appeal before us. 6. We have heard both the parties and perused the records. The ld. Counsel of the assessee summarized his submissions as under: 1. Assessee is engaged in activity of Management Consultancy Services in Real Estate. Sum of ₹ 35.29,464/-was paid as annual subscription for Exchange Server Services to M/s, Nifinity Limited at Rs,19,68,682/- and to Ws. Cobweb Solutions Limited at ₹ 15,60,782/-. Amount was paid for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rendered by W/s. Nifinity Ltd and M/s. Cobweb Solution Ltd. in the course of business. The expenditure incurred does not bring into existence any capital asset or benefit/ advantage of an enduring nature. It is annual subscription for services rendered and is no capital expenditure. It is in the nature of allowable revenue expenditure. Addition itself being unsustainable question of levy of penalty does not arise. Penalty levied is bad in law. 7. Expenditure Incurred is annual subscription for Exchange Server Services and was claimed as revenue expenditure, A,(X has concluded the same as capital expenditure. Complete particulars of expenditure incurred furnished before A,O. it was a case of difference of opinion and at best debatable matter, it is no case/ of concealment of income or furnishing inaccurate particular of income. Reliance on: i) ITAT Delhi Bench in ITA 94/Del/2012 in the case of New Delhi Television Ltd. order dated 2/03/2020. 8. Perusal of penalty order indicate that penalty has been levied for furnishing inaccurate particulars of Income by invoking Explanation 1 to Section 271(1)(c) of IX Act 1961 Explanation 1 is a deeming prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g adverse remain out of decision relied upon by A.O. 11. A.O. in penalty order at para 5,2 has placed reliance on decision of MAK Data Pvt , Ltd. vs. GIT reported at 35S ITR 0593. In the aforesaid case incriminating evidence was found in the course of survey proceedings from premises of sister concern before the original return was filed by assessee . Income emanating out of incriminating evidence was not shown in original return and was surrendered subsequently. On aforesaid facts it was concluded by Hon'ble Apex Court that surrender of Income is not voluntary and assessee is liable for penalty u/s. 271(l)(c) of I.T, Act 1961. The facts in the case of assessee are distinguishable, in the case of assessee there is merely disallowance of bonafide expenditure claimed. No Incriminating evidence is brought on record to make addition. Penalty levied is unsustainable in terms of decision of Hon'ble Apex Court in the case of Reliance Petroproducts (P) Ltd, In view of above, nothing adverse can be held against assessee from decision of MAK Data Pvt Ltd 12. A.O. in assessment order at para 5,3 has plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een levied on an addition of ₹ 35,92,393/-. The said expenditure was claimed as revenue expenditure. The same was disallowed and held to be in capital field. The nature of the expenditure was service rendered by two parties, which was of the nature of annual subscription of exchange service. The assessee s claim is that the same does not bring into existence any asset of capital nature. The A.O. has held otherwise. Now the first question in the aforesaid circumstances is whether the aforesaid can be treated as concealment of income and or furnishing of inaccurate particulars of income. 10. In this regard, the exposition of Hon'ble Supreme Court in the case of CIT vs. Reliance Petro Products Pvt. Ltd. [2010] 322 ITR 158 (SC) applies on all fours to the facts of the present case. In the aforesaid case, the Hon'ble Supreme Court has expounded that mere disallowance of claim cannot ipso facto lead to the conclusion that the assessee is guilty and needs to be visited with the rigors of penalty u/s.271(1)(c) of the Act, unless the claim made by the assessee is found to be ex-facie bogus. 11. Examining the present case, on the touchstone of the afore-said decision, we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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