2016 (11) TMI 1559

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....g charges paid on term loan treated as the capital expenditure. Disallowance of Rs. 1,39,392/- on account of foreign exchange loss on import of machinery and disallowance of Rs. 75,000/- on account of payment of bills pertaining to earlier years. 4. In respect of above disallowance, AO also levied penalty u/s.271(1)(c) which was confirmed by CIT(A) and assessee is in further appeal before us. 5. We have considered rival contentions in respect of franking expenses, we found that expenditure was incurred for obtaining the bank loan. Merely, because AO has considered the expenses as capital in nature, same does not amount to furnishing of any inadequate particulars of income, therefore, not liable to penalty u/s. 271(1) ( c). Similarly, ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ds. The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing of inaccurate particulars. Therefore, it must be shown that the conditions under section 271(1)(c ) exist before the penalty is imposed. There can be no dispute that everything would depend upon the return filed, 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. The word 'particulars' must mean the details supplied in the re....