Appeal allowed, penalty deleted under section 271(1)(c). Wrong claim /= inaccurate particulars/concealment.

The Tribunal allowed the appeal, directing the AO to delete the penalty imposed under section 271(1)(c) for all disallowances. It emphasized that a mere wrong claim does not constitute furnishing inaccurate particulars of income or concealment of income. The order was pronounced on 23/01/2020 at Ahmedabad.

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Issues Involved:
1. Disallowance of Rs. 91,726/- being payment of consolidated tax under section 43B.
2. Disallowance of Rs. 2,97,572/- under section 36(1)(v) being delayed payment of ESI and PF.
3. Disallowance of Rs. 1,530/- under section 36(1)(iii) being interest paid on purchase of capital goods.
4. Disallowance of Rs. 14,500/- under section 37 being penalty paid to Sales Tax and Excise Department.

Detailed Analysis:

1. Disallowance of Rs. 91,726/- being payment of consolidated tax under section 43B:

The assessee claimed an expenditure of Rs. 10,99,789/- towards consolidated tax in the profit and loss account, out of which Rs. 91,726/- was paid after the due date of filing the Income Tax Return. The AO initiated penalty proceedings under section 271(1)(c) for furnishing inaccurate particulars of income. The assessee argued that the deduction was claimed under a bona fide belief and the tax auditor had not disallowed it. The CIT(A) upheld the AO's order, stating the assessee concealed particulars of income. However, the Tribunal found that the claim was not false but disallowed by operation of law (section 43B). Hence, the penalty for concealment of income was not justified.

2. Disallowance of Rs. 2,97,572/- under section 36(1)(v) being delayed payment of ESI and PF:

The assessee claimed the deduction based on the judgment of Hon’ble Delhi High Court in AIMIL Ltd., which was in favor of the assessee. The jurisdictional High Court's judgment in CIT vs. Gujarat State Road Transport Corporation, which was against the assessee, was rendered after the filing of the revised return. The Tribunal concluded that the deduction was claimed under a bona fide belief and thus, the penalty for concealment of income was not warranted.

3. Disallowance of Rs. 1,530/- under section 36(1)(iii) being interest paid on purchase of capital goods:

The assessee claimed the interest expenses as revenue expenditure, believing it was allowable. The CIT(A) upheld the AO's disallowance, stating it was capital in nature. The Tribunal noted that there was no allegation that the interest expense was incurred for the extension of the existing business. The claim was not false, and the assessee disclosed all material facts. Thus, the penalty for concealment of income was not justified.

4. Disallowance of Rs. 14,500/- under section 37 being penalty paid to Sales Tax and Excise Department:

The assessee argued that the expenses were incurred in the course of business and wrongly classified as a penalty. The CIT(A) upheld the AO's disallowance, stating penalties are not allowable deductions. The Tribunal found no evidence that the penalties were compensatory in nature and noted that the assessee disclosed all requisite details. Therefore, the penalty for concealment of income was not justified.

Conclusion:

The Tribunal set aside the CIT(A)'s findings and directed the AO to delete the penalty imposed under section 271(1)(c) for all the disallowances. The appeal of the assessee was allowed. The Tribunal emphasized that a mere wrong claim does not amount to furnishing inaccurate particulars of income or concealment of income. The order was pronounced on 23/01/2020 at Ahmedabad.

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