TaxTMI 
TaxTMI 
2015 (3) TMI 1394
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....penalty of Rs. 3.16 lacs in view of the fact that assessee had claimed an expenditure of Rs. 15,94,244/- on account of acquisition of new software which, the A.O. during assessment proceedings had held to be of capital nature and, and held that the expenditure needed to be capitalized. The A.O. allowed depreciation on such capitalization and made the addition of difference between revenue expenditure claimed and depreciation allowed and also imposed penalty u/s 271(10(c). Aggrieved, the assessee filed appeal before Ld. CIT(A) and Ld. CIT(A) on the basis of submissions filed by assessee, deleted the penalty by holding as under: "2.2 I have gone through the penalty order as well as the submissions of the appellant's AR. The Assessing Of....
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....ed. It is, therefore, wholly unjustified to interpret 'civil liability' of penalty u/s. 271 (1) (c) should be construed to mean that the penalty is an automatic consequence of an addition being made to the income of the assessee. A penalty u/s. 271 (1) (c) irrespective of whether it is a civil liability or a criminal liability, can only be imposed when scheme of the Act permits or requires so; not only that it is not an automatic consequence of an addition being made to the income, but an addition made during the course of assessment proceedings, by itself, cannot be enough to initiate, leave aside, conclude, penalty proceedings u/s. 271 (1) (c). Therefore, a finding recorded in the Assessment Order may constitute good evidence in t....
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....pellant could not have had a motive of evading tax while claiming these expenses as revenue expenditure. For the reasons given above, the concealment penalty levied by the Assessing Officer is directed to be deleted. Grounds Nos. 2 & 3 of the appeals are allowed." 3. Aggrieved, the Revenue is in appeal before us. 4. Ld. D.R. at the outset submitted that the assessee had wrongly claimed revenue expenditure for a capital asset and therefore, had furnished inaccurate particulars of income and had concealed income and, therefore, A.O. had rightly imposed the penalty. 5. Ld. A.R. on the other hand submitted that the addition has been made in view of assessment order passed as a consequence of order u/s 263 of the Act and A.O. is not empowered....