TaxTMI 
TaxTMI 
2012 (8) TMI 270
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.... year 2003-04. The only dispute raised in this appeal is regarding levy of penalty under section 271(1)(c) in respect of disallowance of claim made by the assessee under section 35D of the Income tax Act, 1961(the Act). The assessee for the relevant year had declared total income of Rs.1,01,970/- in the return filed on 1.12.2003 in which the assessee had claimed deduction of Rs.6,35,432/- under section 35D on account of preliminary expenses. The AO in the assessment order noted that the assessee co had been incorporated more than 10 years ago. He, therefore, disallowed the claim of deduction on account of preliminary expenses. The AO also initiated penalty proceedings under section 271(1)(c) of the Act. The AO had issued show cause notice ....
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....le Supreme Court in the case of Dharmendra Textile & Processors (306 ITR 277) in which it has been held that penalty under section 271(1)(c) is only a civil liability and mensrea is not required to be proved by the revenue. CIT(A), therefore, confirmed the penalty levied aggrieved by which, the assessee is in appeal before the Tribunal. 4. Before us, the ld. AR for the assessee reiterated the submission made before the lower authorities that the claim of deduction made by the assessee was bonafide claim and therefore, no penalty should be levied. Reliance was placed on the judgment of Hon'ble Supreme Court in the case of Reliance Petroproducts Pvt. Ltd. (supra). The ld. DR on the other hand strongly supported the orders of authorities belo....
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....not required to be proved by the revenue. Thus a case of penalty is to be evaluated under the provisions of Explanation -1 to section 271(1)(c) of the Act as per which, in case, in respect of any addition, the assessee offers Explanation which he is not able to substantiate and is also not able to prove that the Explanation is bonafide and all necessary details in relation to claim have been given, penalty is leviable. In this case, the expenditure claimed was in relation to IPO issued many years ago. It has not been shown before us as to how claim can be made in this year under section 35D or how claim can be allowed even under section 37 when the claim relates to issue of share capital which is of the nature of capital. The assessee has a....