TaxTMI 
TaxTMI 
2015 (2) TMI 626
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.... company. In this case the Assessing Officer on examination of the case, found that the company has not carried out any business activities. However, it has incurred total expenditure to the tune of Rs. 43,08,317/- and on account of which it has claimed the loss to that extent. Again, on going through the details and nature of expenses claimed by the assessee, A.O. found that the entire expenditure of Rs. 43,08,317/- can be divided into two segments - one on account of interest payment of Rs. 40,76.035/- and second on account of misc. expenditure of Rs. 2,32,282/-. The interest has been paid on loans and the expenses are in the nature of pre-operative expenses. On analysis of the above expenditure in the light of the fact that no business a....
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....t that mere disallowance or addition will not be sufficient for levy of penalty under section 271(1)(c). Ld. CIT(A) held as under:- "In view of the above and taking into consideration the facts (a) that the appellant had disclosed all material facts and (b) on the claim of appellant two opinions are possible, it is held that there is no case of concealment or furnishing of inaccurate particulars of its income in respect of disallowance of (i) Rs. 40,76,035/- out of interest expenses; (ii) Rs. 2,09,177/- on account of rent and taxes, legal and professional expenses, audit fees, printing and stationery, filing fees and bank charges; and (iii) disallowance of Rs. 23,105/- on account of preliminary expenses. Therefore, it is held that Assess....
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...., the question of allocating the above expenditure to any particular project does not arise. In this view of the matter, he claimed that charging of the aforesaid expenditure in the profit and loss account cannot be said to be wrong claim. Hence, he pleaded that the above method adopted by the assessee may be debatable, but it is not bogus. In this regard, Ld. Counsel of the assessee placed reliance upon the following cases laws:- - 330 ITR 547 - CIT vs. Krishna Maruti Ltd. (DEL) - 349 ITR 112 - Karan Raghav Experts P Ltd. vs. CIT (DEL) - 329 ITR 483 - Devsons Pvt. Ltd. vs. CIT (DEL) - 259 ITR 212 - CIT vs. Harshvardhan Chemicals & Minerals P Ltd. - Order of Apex Court in Reliance Petro 322 ITR 158 6. We have heard both th....
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....rom assessment proceedings. Finding in the assessment proceedings are not conclusive. The entire material available should be considered afresh by the Assessing Officer before imposing penalty u/s. 271(1)(c). 8. In this regard, we note that assessee has duly disclosed all the items of expenditure in the profit and loss account. Hence, there cannot be any allegation of concealment or furnishing of inaccurate particulars. It is not the case that any expenditure has been found to be bogus. 9. This is the first year of the company operation. The company has only been set up in this year and the only activity performed by the company is purchase of lands. In this purchase the assessee has incurred interest expenditure. The assessee has als....
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....he first year of the assessee's existence and no specific project was started. When the matter is debatable, the assessee cannot be visited with the levy of penalty u/s. 271(1)(c). In this regard, the case laws referred by the Ld. Counsel of the assessee are germane and support the case of the assessee. 13. From the above, discussion, we find that the assessee's claim of expenditure during the current year by charging of the routine expenditure incurred for running the business, the preliminary expenses and the interest expenditure cannot be a ex-facie wrong claim. In such circumstances, we find that Ld. DR's reliance upon the case laws mentioned above are not applicable as in those case laws of Escorts Finance Ltd. and Zoom Communicatio....