2021 (7) TMI 154

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.... the learned CIT(A) is erroneous, illegal and unsustainable in law. 2. The learned CIT(A) erred in sustaining penalty on the issue of disallowance of forex loss of Rs. 42,60,676, which issue is highly debatable and at any rate was a legal claim made by the Appellant in respect of which two views are possible. 3. The learned CIT(A) erred in sustaining penalty on the alleged disallowance of Rs. 4,00,000/- made under section 14A of the Act. The CIT(A) failed to appreciate that the very disallowance is unsustainable as there is no satisfaction recorded by the AO in the asst. order that the Appellant has incurred expenditure in respect of exempted income. For these and any other ground that may be urged at the time of ....

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....-. 3.1. During the course of assessment proceedings, the Assessing Officer observed that the appellant company had debited a sum of Rs. 39.70 lakhs towards exchange variance. On verification of details furnished by the appellant company, it was noticed by the Assessing Officer that there is a forex loss of Rs. 42,60,676/- on account of purchase of machinery from Yamazaki Mazak Singapore Pte. The appellant company in its books recorded the entry as capital. However, after accounting for certain forex income, the net loss of Rs. 39.70 lakhs had been claimed as deduction the Profit and Loss account. Thus there was violation of section 43A, therefore, the Assessing Officer issued notice u/s 274 rws 271(1)(c) for furnishing inaccurate particu....

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....ing on a decision of Karnataka High Court in case of CIT Vs. Manjunatha Cotton & Ginning Factory, [2013] 359 ITR 565/210 allowed the appeal of the assessee holding that notice issued by Assessing Officer u/s. 274 read with section 271(1)(c) was bad in law, as it did not specify under which limb of section 271(1)(c) penalty proceedings had been initiated, i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars of income. Similar issue has also been decided by the Hon'ble High Court of Bombay at Goa in the case of Mr. Mohd. Farhan A. Shaikh Vs. DCIT in Tax Appeal Nos. 51 & 57 of 2012, dated 11/03/2012, in which, many judgments have been considered by the Three Member Bench. 8.1. In the case under c....