TaxTMI 
TaxTMI 
2012 (12) TMI 519
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....ned Assessing Officer in levying penalty of Rs.97,99,303/- u/s 271(1)(c) of the Income Tax Act, 1961." 3. The other grounds raised by the assessee are only arguments in support of above ground No.1. 4. At the time of hearing before us, it was stated by the learned counsel that during the accounting year relevant to the assessment year under consideration, the assessee acquired the hotel, viz., Laxmi Vilas Palace, Udaipur under the disinvestment process of India Tourism Development Corporation Ltd. (ITDC). Till 25th February 2002, the business of the hotel was carried on by ITDC and, from 26th February 2002, by the assessee. The assessee filed the return disclosing the loss of Rs.2,86,58,220/-. The Assessing Officer completed the asses....
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....e. That the expenditure was clearly in the nature of revenue expenditure and that the expenditure was incurred by ITDC from whom the assessee acquired the hotel. That the assessee had furnished all the particulars in this regard before the Assessing Officer. That the Assessing Officer had disallowed the loss of Rs.1,62,58,105/- for the period 01.04.2001 to 25.02.2002 on the ground that the assessee could not produce necessary details in the form of bills, vouchers etc. It is submitted by the learned counsel that for the aforesaid period, the hotel was run by ITDC and not by the assessee. That the ITDC is a government undertaking and they had not supplied the necessary bills, vouchers etc. to the assessee. That the aforesaid facts were state....
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....ITR 611 (Delhi). (iii) CIT Vs. Mushashi Autoparts India P.Ltd. - 330 ITR 545 (Delhi). 6. The learned DR, on the other hand, relied upon the orders of authorities below and he stated that the assessee has furnished inaccurate particulars in respect of business loss and deferred revenue expenditure. That the disallowance of these two expenditure was upheld by the CIT(A) and assessee withdrew its appeal from the ITAT. He, therefore, submitted that the claim of this expenditure/loss by the assessee was wrong and penalty under Section 271(1)(c) was rightly levied by the Assessing Officer and sustained by the learned CIT(A). In support of this contention, he relied upon the decision of Hon'ble Jurisdictional High Court in the case of Com....
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....accurate particulars of the income of the assessee, but it cannot be disputed that the claim made by the assessee needs to be bona fide. If the claim besides being incorrect in law is mala fide, Explanation 1 to section 271(1)(c) would come into play and work to the disadvantage of the assessee. The court cannot overlook the fact that only a small percentage of the income-tax returns are picked up for scrutiny. If the assessee makes a claim which is not only incorrect in law but is also wholly without any basis and the explanation furnished by him for making such a claim is not found to be bona fide, it would be difficult to say that he would still not be liable to penalty under section 271(1)(c) of the Act. If we take the view that a cl....
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....jected to audit. In the absence of any details from the assessee, we fail to appreciate how such deductions could have been left out while computing the income of the assessee-company and how it could also have escaped the attention of the auditors of the company." 8. Thus, after considering the decision in the case of Reliance Petroproducts Pvt.Ltd. (supra), it was stated by the Hon'ble Jurisdictional High Court that mere submitting a claim which is incorrect in law would not amount to giving inaccurate particulars of the income of the assessee but if the claim, besides being incorrect in law is mala fide, Explanation 1 to Section 271(1)(c) would come into play. If the assessee's claim is bona fide, then he will not be liable for penalt....
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....eld to be an act of concealment, specially when the assessee had a reasonable cause for its inability to produce the same. So far as the disallowance of renovation expenditure holding the same as capital expenditure is concerned, we are of the opinion that in the case of a hotel whether an expenditure on the renovation of hotel premises i.e. restaurant, bar & lounge, corridor, rooms, staircase, entrance lobby etc. is a capital or revenue is a highly debatable issue. Therefore, merely because the expenditure was claimed by the assessee as a revenue expenditure but treated as capital expenditure by the Revenue would not be sufficient to hold that the assessee either furnished inaccurate particulars or concealed the income. It is not the case ....