The ITAT, an Appellate Tribunal, considered the levy of penalty...

The ITAT, an Appellate Tribunal, considered the levy of penalty u/s 271(1)(c) for disallowance of prior period expenditure and ad hoc disallowance due to non-filing of relevant documents. The assessee inadvertently claimed a higher share of indexed costs of construction and improvement. Citing the case law RELIANCE PETROPRODUCTS PVT. LTD., it was established that a mere claim, even if rejected by the Assessing Officer, does not warrant penalty. The additional indexed costs of improvement claimed by the assessee were found to be inadvertent and did not result in any benefit. Therefore, the penalty was not justified as there was no evidence of the assessee benefiting from the inaccurate particulars of income. The appeal by the assessee was allowed.