TaxTMI 
TaxTMI 
2018 (9) TMI 966
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....ct has held that the issue was a debatable issue and not levied penalty thereon, it could not be validly held that, claim was not based on any reasonable interpretation of law and, appellant has failed to make a clear disclosure of his claim to warrant the levy of penalty u/s 271(1)(c) of the Act. 1.2 That adverse findings and conclusions recorded by the . learned Commissioner of Income Tax (Appeals) to levy penalty in respect of expenditure on upgradation of website are wholly misconceived, misplaced and, also contrary to the settled judicial position. 2 That the learned Commissioner of Income Tax (Appeals) has also erred both in law and on facts in upholding the levy of penalty on an addition made of sum of Rs. 37,52,700/- representing expenditure incurred on fee paid to Registrar of Companies ("ROC") and, stamp duty for increase in authorized capital by the appellant company 2.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that aforesaid claim of expenditure was an inadvertent bonafide claim made by an appellant who had been assessed at a loss of Rs. 71,97,11,614/- and therefore, penalty sustained by holding that appellant failed to make a....
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....ice to initiate the penalty proceedings as the assessee company has not been made aware if it has concealed the particulars of income or has furnished inaccurate particulars of such income and relied upon the decision rendered by the Hon'ble Karnataka High Court in case of CIT vs. Manjunatha Cotton and Ginning Factory & Ors. 359 ITR 565 (Karn.); that the assessee has not furnished any inaccurate particulars of income rather all the facts have been brought on record nor any such particulars have been found to be inaccurate or erroneous or false leading to concealment of income; that expenditure incurred on webhosting charges and misc. expenditure for website development were genuine business expenditure and relied upon the assessee's own case for AYs 2004-05 & 2005-06 in ITA No.381/Del/2009 dated 17.08.2015, affirmed by Hon'ble Delhi High Court; that expenditure incurred on share capital were also business expenditure and was not having any enduring benefit to the assessee and as such claimed as revenue expenses and relied upon the decision of the coordinate Bench of the Tribunal in JRK Auto Parts (P) Ltd. vs. ACIT in ITA No.3458/Del/2014 dated 31.05.2017 after noting the decision o....
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....he Act reproduced above goes to prove that assessee has not been called upon to explain if he has concealed the particulars of income or furnished inaccurate particulars of such income rather a tick has been marked against both the charges mentioned in the printed proforma. Hon'ble Karnataka High Court in case of CIT vs. Manjunatha Cotton and Ginning Factory & Ors. (supra) dealt with the identical issue threadbare and came to the following conclusion :- "63. In the light of what is stated above, what emerges is as under: a) Penalty under Section 271(1)(c) is a civil liability. b) Mens rea is not an essential element for imposing penalty for breach of civil obligations or liabilities. c) Willful concealment is not an essential ingredient for attracting civil liability. d) Existence of conditions stipulated in Section 271(1)(c) is a sine qua non for initiation of penalty proceedings under Section 271. e) The existence of such conditions should be discernible from the Assessment Order or order of the Appellate Authority or Revisional Authority. f) Ever if there is no specific finding regarding the existence of the conditions mentioned in Section 271(1)(c), at least the f....
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....ound mentioned in Section 271 are mentioned would not satisfy requirement of law. r) The assessee should know the grounds which he has to meet specifically. Otherwise, principles of natural justice is offended. On the basis of such proceedings, no penalty could be imposed to the assessee. s) Taking up of penalty proceedings on one limb and finding the assessee guilty of another limb is bad in law. t) The penalty proceedings are distinct from the assessment proceedings. The proceedings for imposition of penalty though emanate from proceedings of assessment, it is independent and separate aspect of the proceedings. u) The findings recorded in the assessment proceedings in so far as "concealment of income" and "furnishing of incorrect particulars" would not operate as res judicata in the penalty proceedings. It is open to the assessee to contest the said proceedings on merits. However, the validity of the assessment or reassessment in pursuance of which penalty is levied, cannot be the subject matter of penalty proceedings. The assessment or reassessment cannot be declared as invalid in the penalty proceedings." 10. So, following the law laid down by Hon'ble High Court, we ar....
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....hi in case cited as CIT vs. DCM Limited - 359 ITR 102 held as under :- "Law does not bar or prohibit an assessee for making a claim, which he believes may be accepted or is plausible. When such a claim is made during the course of regular or scrutiny assessment, liberal view is required to be taken as necessarily the claim is bound to be carefully scrutinized both on facts and in law. Full probe and appraisal is natural and normal. Threat of penalty cannot become a gag and/ or haunt an assessee for making a claim which may be erroneous or wrong, when it is made during the course of the assessment proceedings. Normally, penalty proceedings in such cases should not be initiated unless there are valid or good grounds to show that factual were provided in the computation. Law does not bar or prohibit a person from making a claim, when he knows the matter is going to be examined by the Assessing Officer." 14. Hon'ble Supreme Court in a case cited as Reliance Petro Products Pvt. Ltd. (supra) decided the identical issue in favour of the assessee. Operative part of which is reproduced for ready reference as under :- "A glance at the provisions of section 271(1)(c) of the I.T. Act, 196....