TaxTMI 
TaxTMI 
2010 (11) TMI 205
X X X X Extracts X X X X
X X X X Extracts X X X X
.... paid stamp duty expenses of Rs. 1,73,040/- to the Registrar of Companies,Gujarat. The assessee also stated that it has no objection to the proposed disallowance of the said expenditure. The AO accordingly disallowed Rs. 1,73,040/- and on the same matter penalty proceedings were initiated. The AO also noted that the assessee has not filed any appeal against the addition on merit. The AO noted in the penalty order that the particulars furnished by the assessee was factually incorrect and also was not bona fide, therefore, penalty was leviable. The AO also noted in the penalty order that concealment of income can take place in two ways, either an item of receipt may be suppressed fraudulently or an item of expenditure may be falsely claimed. In both types, attempts are made to reduce taxable income. The AO accordingly noted that in the present case the assessee has concealed taxable income by way of wrong claim of expenditure which was not in accordance with the IT Act. The AO accordingly imposed penalty u/s 271(1)(c) of the IT Act for furnishing inaccurate particulars of income. The penalty order was challenged before the learned CIT(A) and written submission was filed which is inco....
X X X X Extracts X X X X
X X X X Extracts X X X X
....disallowance. The said disallowance was not appealed against." "2.2.1 The Apex Court in the case of Punjab State Industrial Corporation v. CIT 225 ITR 792 and Brooke Bond India Ltd. v. CIT 225 ITR 798 held that expenditure incurred in connection with increasing share capital by a company would not be allowable as revenue expenditure. These decisions date back to the year 1997. 2.2.2 Therefore, in view of the long-settled legal position, appellant had no justifiable reason to claim the impugned expenses. They had no explanation to offer in the assessment or appellate proceedings. 2.2.3 In view of the above discussion, appellant's blatantly inadmissible claim resulted in furnishing particulars of income. Hence, A.O's action in levying penalty is upheld. Penalty order is confirmed. 3. Accordingly, appeal is dismissed." 4. The learned Counsel for the assessee reiterated the same submissions made before the authorities below and submitted that the assessee disclosed the amount in question in the profit & loss account under the head "administrative and selling expenses" and that in the earlier order u/s 143(3) of the IT Act no addition has been made. Therefore, it cannot b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s made false and wrong claim of expenditure in the return of income which was not in accordance with Income Tax Act. The action of the assessee was found to be furnishing inaccurate particulars of income and, therefore, concealed the taxable income. It is also admitted fact that the assessee has made a wrong and bogus claim of deduction of expenditure in the profit & loss account on account of deduction on account of stamp duty paid. The claim of the assessee was clearly hit by the decisions of the Hon'ble Supreme Court in the cases of Punjab State Industrial Corporation and Brooke Bond India Ltd. (supra) as noted above by the learned CIT(A) in his findings in which the Hon'ble Supreme Court held that "the expenditure incurred in connection with increasing share capital by a company would not be allowable as revenue expenditure". These decisions were rendered by the Hon'ble Supreme Court way back in the year 1997. Therefore, it is settled legal proposition that the expenditure incurred in connection with increasing share capital cannot be allowed as revenue expenditure. The profit & loss account and balance sheet is prepared by Chartered Accountant and it is highly unbelievable tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... assistance in computation of its income, and its accounts were compulsorily subjected to audit. The Tribunal erred in law in deleting the penalty in respect of the amount of Rs. 1 lakh claimed as deduction on account of payment of income-tax and the amount of Rs. 13,24,539 debited under the head "equipment written off", in the profit and loss account of the assessee." The Hon'ble Delhi High Court in the case of CIT v. Escorts Finance Ltd. 328 ITR 44 held as under: "(ii) That the assessee had nowhere pleaded that the return was filed claiming benefit of section 35D of the Act on the basis of the opinion of the chartered accountants. Merely because information was available in the tax audit report, that would not absolve the assessee. Even if there was no concealment of income or furnishing of inaccurate particulars, but on the basis thereof the claim which was made was ex facie bogus, it could attract penalty provision. It was not a case where two opinions about the applicability of section 35D were possible. Therefore, it could not be a case of bona fide error on the part of the assessee. The relief under section 35D of the Act was confined only to an existing industrial und....