2018 (7) TMI 2164

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....eading to the levy of penalty in this case are as under: In the assessment order passed by the Assessing Officer u/s 143(3), an amount of Rs. 30,00,000/- was disallowed on account of provision for excise liability. Against the addition made on account of provision for excise liability expenses amounting to Rs. 30,00,000/-, the assessee has filed appeal before the CIT(A)-18, Mumbai. The ld. Commissioner of Income Tax (Appeals) allowed all the expenses except provision for excise liability, vide order dated 27-07-2011, has partly allowed the appeal of the assessee by holding that the payment of excise duty can only be availed/allowed u/s. 43B on actual payment. Subsequently, the Assessing Officer has issued notice to the assessee to explain....

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....case that the appellant has made provision for excise liability expenses payable, the entry was reversed in F.Y.2006-07 and was taxed in A.Y.2007-08. Although the provision is not allowable expenditure, but it cannot be treated as concealment of income or submission of inaccurate particulars of income Because disallowance made u/s 43B of the Income-tax Act 1961, is purely a legal issue and no penalty is leviable on legal issues. The facts of the present case are squarely covered by the decision of the Hon'ble Supreme Court in the case of Reliance Petroproducts Pvt. Ltd. 322 ITR 158 where it is held that mere making of a claim which is not sustainable in law, by itself, will not amount of furnishing of inaccurate claim or furnishing inac....

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....ers of the assessing officer. 7. Per Contra learned counsel of the assessee supported the order of the ld. Commissioner of Income Tax (Appeals). He submitted that assessee has disclosed all the relevant particulars in this case. He submitted that the disallowance of claim of assessee cannot lead to the levy of penalty under section 271(1)(c). In this regard, the learned counsel of the assessee placed reliance upon following case laws from the ITAT: 1. Envair Electrodyne Ltd. vs. Dy. CIT (in ITA No. 595/PN/2008 vide order dated 06.09.2010); 2. Patson Auto Products Pvt. Ltd. vs. Asst. CIT (in ITA No. 471/PN/07 vide order dated 30.11.2010); 3. Dy. CIT vs. Budge Budge Jute Ltd. (in ITA No. 979/Kol/2013 vide order dated 16.03.2016) 8. We....