TaxTMI 
TaxTMI 
TaxTMI 
2013 (4) TMI 96
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....0 was completed at an income of Rs. 1,659,031,250.00 vide order dtd. 30-3-2000 passed u/s 143(3) of the Act. On appeal, the ld. CIT(A) while restricted the said disallowance at Rs. 52,33,041.00 partly allowed the appeal. While completing the assessment, the A.O. also initiated penalty proceeding u/s 271(1)(c) of the Act. Accordingly, the assessee was asked to show cause as to why penalty u/s 271(1)(c) of the Act should not be imposed. In response, the assessee after referring to the provisions of section 271(1)(c) of the Act and certain decisions submitted that since the A.O. has not recorded his satisfaction in the assessment order before initiating the penalty proceeding, the penalty is not leviable. On merits, it was, inter alia, submitted as under:- "Out of the grounds taken up by the assessee company in its appeal against the order of CIT(A) to Hon'ble ITAT, Mumbai, only following disallowances which were not pressed by us have been confirmed by it vide order no. ITA No. 3543/Mum/02 : Gr. No. Grounds Amount (Rs) 3 Disallowance of rent, repairs, rates, taxes and 25,61,055 depreciation relating to guesthouse u/s 37(4) 9(a) Furniture and Fixture Repairs 20,00,000 (b) Building ....
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....s Amount (Rs) 1 Disallowance of Guest House Expenses u/s 47,54,758.00 37(4) of the I.T. Act, 1961. 2. Addition under Income from House property 2,62,920.00 3 Disallowance of Bad Debts written off 1,161,47,546.00 4 Repair Expenditure disallowed as Capital 52,33,041.00 Expenditure And accordingly the A.O. on the above disallowances/additions, has imposed penalty of Rs. 1,13,51,253.00 vide order dtd. 29-8-2008 passed u/s 271(1)(c) of the Act. On appeal, the ld. CIT(A) while deleting the penalty imposed by the A.O. on account of disallowance of guest house expenses Rs. 47,54,758.00, addition under income of house property Rs. 2,62,920.00 and disallowance of bad debts written off Rs. 1,61,47,546.00, however, confirmed the penalty imposed by the A.O. in respect of disallowance of repair expenses Rs. 52,33,041.00 treated as capital expenditure and accordingly partly allowed the appeal. 3. Being aggrieved by the order of the ld. CIT(A) the assessee is in appeal before us challenging in all the grounds the sustenance of penalty on the disallowance of repair expenditure treated as capital expenditure Rs. 52,33,041.00. 4. At the time of hearing the ld. counsel for the assessee, at the outs....
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....of computation of income attached with the return of income for A.Y. 1997-98 which at the cost of repetition reads as under:- "Since the question whether a repair expenditure is revenue or capital is a highly debatable one, the admissibility as revenue expenditure of amount debited, as repairs will be discussed at the time of assessment." However, in the assessment proceeding the A.O. has made the disallowance of building repair, furniture and fixture repair and other repair expenses Rs. 58,92,803.00 as capital expenditure. On appeal, the ld. CIT(A) while partly allowing relief, however, reduced the disallowance to 52,33,041.00 as against Rs. 58,92,803.00 made by the A.O. Since the assessee did not press the above issue before the Tribunal, the Tribunal dismissed the said ground raised by the assessee being not pressed. We further find that on similar facts and circumstances of the case, the Tribunal in assessee's own case in DCIT vs. Bennett Coleman & Co. Ltd. in ITA No. 1189/Mum/2009 for A.Y. 1993-94 dtd. 30-4-2010 while relying on the order of the Hon'ble Supreme Court in Reliance Petroproducts Pvt. Ltd. (supra) has deleted the penalty vide finding recorded in para 28 of the o....
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....tment that assessee has claimed the said expenditure only to avoid tax. We observe that assessee placed all relevant facts in the return filed and made its claim bonafide as revenue expenditure. Nothing is available on record to show that belief of the assessee and the explanations of the assessee were false and inherently impossible. Even an erroneous claim for deduction cannot warrant penalty unless and until it is proved that claim is made with dishonest intention as observed by the Tribunal in assessee's own case for A.Y. 1993-94 vide order dated 30.4.2010 in I.T.A. No.1189/M/2009 and also by the Hob'ble Apex Court in the case of Reliance Petroproducts Pvt Ltd. (supra). Therefore, we hold that ld CIT(A) has rightly deleted the penalty levied by AO u/s.271(1)(c) of the Act on the said amount of Rs.15,80,169 which was claimed by the assessee as revenue expenditure but held it to be a capital expenditure. In this regard, we are also supported by the orders of Hon'ble Delhi High Court in the case of Auric Investment and Securities Ltd and Bhartesh Jain (supra) that mere change of head of income does not warrant levy of penalty u/s.271(1)(c) of the Act as discussed hereinabove in pa....
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....accurate particulars. There can be no dispute that everything would depend upon the return filed y the assessee, because that is the only document where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability could arise. To attract penalty, the details supplied in the return must not be accurate, not exact or correct, not according to the truth or erroneous. Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars." 12. The Hon'ble Delhi High Court in the case of Devsons (P). Ltd. v. CIT [2010] 329 ITR 483 has held that when a legal issue arises for consideration, which is debatable but the claim made by the assessee is not accepted, thereis no justification to invoke the penalty provisions under Section 271(1)(c). Divergent legal views....