Tribunal partially allows appeal, deletes penalties for disallowed interest & export expenses. Judgment on April 19, 2021.

The Tribunal partially allowed the appeal, deleting the penalties imposed for both the disallowance of interest provision and export product development expenses. The judgment was pronounced on April 19, 2021, in Chennai.

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Issues:
1. Validity of show-cause notice under section 274 r.w.s. 271(1)(c) of the Income Tax Act.
2. Levy of penalty under section 271(1)(c) for disallowance of interest provision.
3. Levy of penalty under section 271(1)(c) for disallowance of export product development expenses.

Issue 1: Validity of Show-Cause Notice:
The appeal challenged the show-cause notice's validity under section 274 r.w.s. 271(1)(c) of the Act, arguing that the notice did not specify the exact charge of concealment or inaccurate particulars. The Tribunal noted that the appellant did not object to the notice's issuance, unlike in a cited case, where specific objections were raised. Consequently, the Tribunal dismissed the ground raised by the appellant.

Issue 2: Penalty for Disallowance of Interest Provision:
The Assessing Officer disallowed a provision for interest payable to Syndicate Bank, treated it as inaccurate particulars, and levied a penalty under section 271(1)(c). However, the Tribunal found that the appellant disclosed the liability in financial statements, indicating no intention to conceal. The Tribunal considered it a bona fide mistake, as the claim, though incorrect, was not an attempt to evade tax. Thus, the penalty was deleted.

Issue 3: Penalty for Disallowance of Export Product Development Expenses:
The Assessing Officer disallowed claimed export product development expenses as revenue expenditure, treating them as capital expenses and levied a penalty under section 271(1)(c). The Tribunal noted that the expenditure was claimed due to the permanent closure of business operations, and the disallowance was agreed upon. It held that the non-acceptance of the claim did not warrant a penalty, as it did not establish a conscious act to furnish inaccurate particulars. The penalty was deleted based on the facts and circumstances.

In conclusion, the Tribunal partially allowed the appeal, deleting the penalties imposed for both the disallowance of interest provision and export product development expenses. The judgment was pronounced on April 19, 2021, in Chennai.

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