2011 (7) TMI 1185

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....ied under Section 271(1)(c) of the Act amounting to Rs. 7,09,557/-. 3. The facts of the case are that the AO imposed penalty under Section 271(1)(c) on the following expenses sustained by the CIT(A) and confirmed by the ITAT: i) Shortage expenses : Rs. 3,39,078/- ii) Tanker Diesel Expenses : Rs. 6,00,000/- iii) Transport Expenses : Rs. 10,00,000/- The CIT(A) cancelled the penalty with the following observations:  "6. I have considered the contentions of the appellant as well as the penalty order. The following observations are made with respect to the facts of the case: * The penalty has been levied on the disallowance of expenses claimed under three heads on estimate basis. * The concealment of income has not b....

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....sessee is allowed." 4. At the time of hearing before us, the learned counsel for the assessee contended that the assessee has furnished all the required details and offered explanation during the assessment proceedings, which were not found to be false or bogus. The additions were made by the AO purely on the basis of estimate which were reduced in appeal. That the disallowance of expenses on estimated basis does not amount to concealment of income for which penalty under Section 271(1)(c) cannot be levied. The learned counsel also relied on the decision in the case of CIT Vs. Reliance Petroproducts Pvt. Ltd., 322 ITR 158 (SC) to support its claim that incorrect claim does not tantamount to furnishing in accurate particulars. The learned....

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....e return filed by 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 would 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 am....