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TMI Blog2022 (2) TMI 172X X X X Extracts X X X X X X X X Extracts X X X X ..... urn of income or not, but merely because the assessee had claimed expenditure which was not accepted or was not acceptable to the Revenue, that by itself would not attract penalty u/s.271(1)(c). As decided in RELIANCE PETROPRODUCTS PVT. LTD. [ 2010 (3) TMI 80 - SUPREME COURT] that merely because claim of assessee was not accepted that by itself would not attract penalty u/s.271(1)(c) of the Income Tax Act, 1961. Also see SHRI S. MARTIN [ 2019 (1) TMI 91 - ITAT CHENNAI] - Decided in favour of assessee. - I.T.A. Nos. 596 And 1295/Chny/2018 And C.O.Nos.55 And 57/Chny/2019 [In ITA Nos. 596 And 1295/Chny/2018] - - - Dated:- 31-1-2022 - Shri Mahavir Singh, Vice-President And Shri G.Manjunatha, Accountant Member For the Appellant : Mr. M. Rajan, CIT For the Respondent : Mr. Soumen Adak, C.A. ORDER PER G. MANJUNATHA, AM: These two appeals filed by the Revenue and two cross objections filed by the assessee are directed against separate, but identical orders passed by the learned Commissioner of Income Tax (Appeals)-29, New Delhi, both dated 26.10.2017 and pertain to assessment years 2011-12 2012-13. Since, facts are identical and issues are co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was assessed under the provisions of Sec.115JB. By citing the Board s circular in No.25/2015 dt.31/12/2015, which stated that prior to 01/4/2016 where the income tax payable on the total income as computed under the regular provisions of the Act was less than the tax payable on the Book Profits u/s.115JB of the Act, then the penalty u/s.271(1)(c) of the Act was not attracted with reference to additions/disallowances made under regular provisions. Since the Board s Circular is binding on the Department, no penalty could be levied on the disallowances made under the regular provisions of the Act, as the appellant was assessed under the provisions of Sec.115JB of the Act. 5) The learned CIT(A) had not specifically discussed the contention of the assessee regarding the assessee s claim on the basis of Board s circular. The assessee interpreted the contents of the Circular for his convenience. The assessee had picked up the first sentence of para (5) of the Circular no.25/2015, dt.31/12/2015 and not considered the following sentence which read It is further clarified that in case prior to 1/4/2016, if any adjustment is made in the income computed for the purpose of MAT, then the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fl this regard, the assessee suo moto disallowed an amount of ₹ 20,00,000/- for earning such income. However, keeping in view of the facts of the case and decisions of various Court, the AO had made a further disallowance of ₹ 3,4053,520/- u/s 14A of the Act read with rule 8D. The said disallowance was also confirmed by Id. CIT(A) as mentioned above. During the appellate proceedings, the assessee was asked to provide the datewise and quantity wise details of various shares sold and purchased during the year and also the position of funds in the bank accounts whether there was a credit balance or debit balance on the date of purchase. Further, it was also asked to explain that if on the date of purchase of particular shares there comes a debit balance, than on product basis calculate the interest till the day the debit balance converts to the credit balance in their said bank account. However, the assessee had failed to explain the same and file any supporting documents. From which it is clear that the assessee had furnished inaccurate particulars of its income. This is clear concealment on part of the assessee. The Hon ble Supreme Court in the case Addl. CIT Vs Jeevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs of the Ld. CIT(A), I am convinced that the assessee has concealed its income by filing inaccurate particulars of its income to the tune of ₹ 340,53520/-, hence liable for penalty u/s 271(1)( c) of the IT. Act, 1961. It was assessee s duty to disclose complete particulars of its income which in this assessee had failed to do so and I am satisfied that it is a fit case for levying penalty under section 271(1)(c) of the Income Tax Act for concealment of Income of ₹ 3,40,53,520/-. The minimum and maximum penalty is worked out as under: Concealed income - ₹ 3,40,53,520!- Tax sought to he evaded - ₹ 1,02,16,056/- Education Cess @ 3% on Income Tax ₹ 3,06,482/- Total ₹ 1,05,22,538/- Minimum penalty @ 100% ₹ 1,05,22,538/- Maximum penalty @ 300% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he claim or calculation of the appellant was not accepted would not attract penalty under section 271(l)(c). Further, merely on the facts that the appellant has not preferred an appeal against the order of the CIT(A) does not follow to the conclusion that the amount was concealed. The appellant themselves disallowed certain amount on account of expenditure incurred on earning exempt income. Thereby, the penalty levied by the AO was not justified. The appellant relied upon various case laws in support of their argument as mentioned in the written submission as discussed on para 4.1(supra). After careful consideration of the facts and circumstances of the case and the case laws retied upon by the appellant, I find merit in their argument that since all the primary facts were disclosed by the appellant, therefore, penalty levied under section 271(1)(c) merely on the disallowance on a debatable issue is not found to be sustainable as the appellant neither concealed the particulars of its income nor furnished inaccurate particulars of such income. Under these circumstances, the AO is directed to delete the penalty levied. 5. In the result, the appeal is allowed. 6. The lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed expenditure which was not accepted or was not acceptable to the Revenue, that by itself would not attract penalty u/s.271(1)(c) of the Act. This principle is supported by decision of the Hon'ble Supreme Court in the case of CIT vs. Reliance Petroproducts Pvt. Ltd. (supra), where the Hon'ble Supreme Court under identical set of facts in light of disallowance of expenditure very clearly held that merely because claim of assessee was not accepted that by itself would not attract penalty u/s.271(1)(c) of the Income Tax Act, 1961. The ITAT., Chennai Bench in the case of ACIT Vs. S.Martin in ITA No.2382/Chny/2016 dated 05.10.2018 has considered an identical issue of levy of penalty for disallowance of expenditure u/s.14A of the Act, and by following decision of the Hon'ble Supreme Court in the case of CIT vs. Reliance Petroproducts Pvt. Ltd. (supra) held that when entire facts was available before the Assessing Officer, it cannot be said that there is concealment of income or furnishing of inaccurate particulars of income. The learned CIT(A) after considering relevant facts and also by following decision of the Hon'ble Supreme Court in the case of CIT vs. Relianc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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