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TMI Blog2023 (6) TMI 811X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 2875 And 2876/Ahd/2017 - - - Dated:- 16-6-2023 - Ms. Annapurna Gupta, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member For the Assessee : None For the Revenue : Shri Bholaram Devashi, Sr. D.R. ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- These two appeals filed by the assessee are against the order of the ld. CIT(A)-8, Ahmedabad, in proceeding u/s. 250 vide order dated 06/10/2017 passed for the assessment year 2009-10 2010-11. 2. The assessee has taken the following grounds of appeal:- A.Y. 2009-10 1. On the facts and circumstances of the case, the CIT (Appeals) has erred in confirming penalty u/s 271(1)(c) of the Act for furnishing inaccurate particulars of income. Ld. CIT(A) ought to have appreciated the fact that while levying penalty there was no clear finding as to whether penalty is initiated for concealment of income or furnishing of inaccurate particulars of income and accordingly in the absence of specific charge penalty levied u/s 271(1)(c) of the Act is required to be deleted. 2. On the facts and circumstances of the case, the CIT (Appeals) has erred in confirming penalty u/s 271(1)(c) of the Act of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we are proceeding to hear the case of the assessee on merits. We shall first take up appeal of the assessee for assessment year 2009-10. 4. The brief facts of the case are that during the course of assessment, the Assessing Officer observed that the assessee had increased the authorized share capital from Rs. 23 crores to Rs. 33 crores. The assessee had incurred expenditure of Rs. 5,01,000/- in connection with increase in authorized share capital. In the assessment proceedings, the Assessing Officer held that such expenditure of Rs. 5,01,000/- was capital in nature and accordingly, could not be allowed to the assessee as revenue expenditure. Accordingly, the Assessing Officer, after recording necessary satisfaction, proceeded to initiate penalty proceedings u/s. 271(1)(c). In the penalty proceedings u/s. 271(1)(c) of the Act, the Assessing Officer proceeded to impose penalty amounting to Rs. 1,50,330/- on disallowance of expenditure incurred on raising authorized share capital. The assessee filed appeal against the aforesaid order passed by the Assessing Officer imposing penalty u/s. 271(1)(c) of the Act, which was dismissed by the ld. CIT(A) with the following observations:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a fide and no particulars were concealed in this behalf. The Tribunal accepted the explanation of the assessee that it was claimed as revenue expenditure by placing reliance on several judicial pronouncements, and therefore, the claim was not mala fide. 7. Similarly the ITAT Mumbai in the case of Jefferris India Pvt. Ltd . in ITA No. 7397/Mum/2018 vide order dated 28-03-2019 also held that no penalty can be imposed u/s. 271(1)(c) of the Act on account of disallowance of expenses incurred for increase of authorized share capital since no penalty can be imposed when there was no willful concealment and mistake involved only a human error. 7.1 In view of the above observations, we are of the considered view that considering the facts of the case and the judicial precedents on the subject as highlighted above, penalty imposed u/s. 271(1)(c) of the Act is liable to be set aside. 8. In the result, the appeal of the assessee is allowed A.Y. 2009-10. 9. Now, we shall take assessee s appeal for assessment year 2010-11 10. Ground No. 1 is general and it does not require any adjudication. Ground No. 2 of assessee s appeal: CIT(A) had erred in confirming penalty u/s. 271 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we are of the considered view that the issue is debatable one, wherein the assessee on one hand has contended that the expenditure on work in progress related to plant and machinery was out of own funds, whereas the Assessing Officer was of the opinion that the assessee has not been able to demonstrate that interest bearing funds were not utilized for investment in work in progress of plant and machinery. However, it is well settled principle of law that mere disallowance by Assessing Officer in the assessee s hands would not lead to automatic levy of penalty u/s. 271(1)(c) of the Act. In this case, the Assessing Officer has not established that the assessee has either concealed his income or furnished inaccurate particulars of income. The assessee has also given a detailed reasoning/working on availability of own fund for investment in work in progress of plant and machinery. However, simply because the Assessing Officer did not accept the contention of the assessee and confirmed addition of Rs. 3,05,399/- towards capitalization of interest expenditure by disregarding the contention of the assessee that there were sufficient interest free funds available with the assessee, would n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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