2014 (4) TMI 628

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....In both these years, the only grievance of the Revenue relates to the deletion of the penalty levied u/s. 271(1)(c) of the Act , though quantum of penalty defer. ITA No. 5260/Mum/2011 - A.Y 2003-04 3. The assessment in this case was completed u/s. 143(3) r.w. Section 142(2A) of the Act vide order dt. 29.11.2006. The assessment was completed after making following disallowances: 3. The assessee got part relief from the Ld. CIT(A) and the final position stood as under: DETAILS OF DISALLWOANCES U/S 271 (1)(C) Thus the final disallowances stood at Rs. 38,79,218/-. The penalty has been levied on these disallowances. 4. During the course of the penalty proceedings, the assessee claimed that it has proved its bonafide for claiming deductions,....

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....falcation. Because of the fraud committed by the Vice President, the assessee could not substantiate its claim with respect to some expenses even during the course of the special audit conducted u/s. 142(2A) of the Act. The assessee could not bring any material evidences in support of its claim of expenditure. The reasons for non production were explained to the Special auditor also. After considering the facts and the submissions and the surrounding circumstances, the Ld. CIT(A) observed that though certain bills/vouchers could not be produced before the Special Auditors but the assessee did produce them before the AO but the AO did not admit such bills/vouchers on the ground that the same were not produced before the Special Auditors. The....

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....chers/bills were in existence because the same have been verified by the Tax auditor. Therefore, the claim of expenses made in the return was correctly made under a bonafide belief. The defalcation had taken place between 2001-02 and 2006-07 and the assessee came to know about the said defalcation when Shri S.G. Teredesai was on leave in the month of June, 2005. Drawing support from the decision of the Hon'ble Supreme Court in the case of CIT Vs Reliance Petro Products Pvt. Ltd. 322 ITR 158, the Ld. CIT(A) was of the firm belief that merely because the assessee had claimed the expenditure which claim was not accepted or was not acceptable to the Revenue that by itself would not attract the penalty u/s. 271(1)(c) of the Act. The Ld. CIT(A) f....

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....iture was bonafide at the time of filing of the return of income. Merely because of subsequent events, the assessee could not produce bills/vouchers to substantiate its claim of expenditure cannot ipso facto lead to the conclusion that the assessee has filed inaccurate particulars. There is a distinction between "wrong claim" and "false claim". Considering the entire factual matrix, it cannot be said that assessee had made false claim. The Ld. CIT(A) has discussed the fact of the case as they were during the course of the assessment proceedings, Special Audit proceedings and in quantum appeal proceedings. Orders of the Tribunal in the case of group companies have been placed before us bearing ITA Nos. 5258 and 5257/M/2011 in the case of Gel....