TaxTMI 
TaxTMI 
2024 (10) TMI 586
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.... given in 20 Assessment years from the impugned assessment year." 2. Apropos solitary ground of appeal of the Revenue as to deletion of penalty u/s 271(1)(c) of the Act by the ld. CIT(A) who observed as under :- "5.0 Decision and Reason: The submissions filed by the appellant and the order appealed against have been perused. 5.1 Vide its first two grounds of appeal the appellant has challenge the penalty imposed by AO of Rs. 1,26,58,910/- u/s 271(1)(c) of Income Tax Act furnishing inaccurate particulars of income. In the instant case the appellant had filed its return declaring total income of Rs. 94,26,39,610/- which was assessed at Rs. 103,64,96,763/- by making addition of Rs. 9,41,02,253/-. In respect of all the additions made by the AO except on disallowance made out of certain expenses, penalty proceedings u/s 271(1)(c) was initiated for furnishing inaccurate particulars of income. After the order of CIT(A)/ ITAT, most of the additions were deleted except that disallowance of Rs. 3,72,43,045/- out of compensation of Rs. 3.92,03,205/- paid to farmers for acquiring mining rights of the land was confirmed. On the above disallowance of Rs. 3,....
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....e incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars. The assessee had furnished all the details of its expenditure as well as income in its return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the revenue, that by itself would not attract the penalty under s. 271(1)(c). If the contention of the revenue is accepted then in case of every return where the claim made is not accepted by AO for any reason, the assessee will invite penalty under sec. 271(1)(c). That is clearly not the intendment of the legislature." The appellant has further submitted that:- "The AO has tried to distinguish the above case by stating that thi....
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.... of a claim, which is not sustainable in law, by itself, will not amount to furnishing Inaccurate particulars regarding the income of the assessee Such a claim made in the return cannot amount to fumishing inaccurate particulars. The assessee had furnished all the details of its expenditure as well as income in its return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the revenue, that by itself would not attract the penalty under s. 271(1)(c). If the contention of the revenue is accepted then in case of every return where the claim made is not accepted by AO for any reason, the assessee will invite penalty under sec. 271(1)(c). That is clearly not the intendment of the legislature." 5.1.6 Further, on identical set of facts the Ld. CIT(A), Kota vide his order dated 12.03.2019 in Appeal No 315/17-18 for A.Y. 2012-13, has deleted the penalty imposed u/s 271(1)(c) of the Income Tax Act. 5.1.7 In view of the abov....
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.....'' 4. At the time of hearing of the appeal, the ld. AR of the assessee relied upon order of the ld. CIT(A) and also filed following written submission "This is with reference to the appeal filed by the Appellant (Department) against the order passed by the National Faceless Appeal Centre, Delhi ("NFApC") deleting penalty of Rs 1,26,58,910 levied by the Ld AO. The following ground of appeal has been raised by the Appellant: Whether of facts and circumstances of the case, the learned CIT(A), NFAC, Delhi was justified in deleting the imposition of penalty u/s 271(1)(c) if the I.T.Act, 1961 amounting to Rs 1,26,58,910 in view of the fact that the ld. CIT(A) has not treated the expenditure as 'Revenue Expenditure' which was to be allowed in the A.Y. itself, BUT, he had allowed the expenditure to be of the nature of "Deferred Revenue Expenditure" benefit of which was directed to be given in 20 Assessment Years from the Impugned assessment year. Facts:- 1. The Respondent filed return declaring total income of Rs. 94,26,39,610/- which was assessed at Rs. 103,64,96,763/- by making addition of Rs. 9,41,02,253/-. In respect of all the additions made by ....
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....d to the Respondent and they have no right on that land now and all the rights of khatedari/kashtkari which was available to them is transferred to Respondent. He, therefore, held that expenditure incurred by Respondent is to protect long term exploitation right over the mining land which is capital in nature. He also held that depreciation is not allowable as amount paid to farmers is on account of purchase of land for mining on which depreciation is not admissible. 6. The Ld. CIT(A) after relying on the findings of his predecessor for AY 2010- 11 and his own decision for AY 2012-13, directed the AO to allow the expenditure equally in 20 years including the current year, thereby allowing the expenditure of Rs. 19,60,160/- out of Rs. 3,92,03,205/- in the year under consideration and thus, confirmed the disallowance of Rs. 3,72,43,045 which was to be allowed as an expenditure in balance 19 years. This finding of Ld. CIT(A) was upheld by the Hon'ble ITAT. Penalty not leviable as stand of granting deduction over 20 years was taken by the Ld AO himself for AY 2008-09. Also, penalty was not initiated in AY 2008-09. 7. It is submitted that the stand of allo....
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....has: * concealed the particulars of his income; or * furnished inaccurate particulars of his income. 11. Only when the aforesaid conditions exists, the designated authorities may direct levy of penalty on the assessee. The expressions 'concealed the particulars of income' and 'furnishing inaccurate particulars of income' have not been defined in the section or elsewhere in the Act. Therefore, reliance is placed on the principles arising out of judicial precedents for ascertaining their connotation. Since, the Ld. AO has levied penalty for furnishing inaccurate particulars of income, the same is analyzed as under: 12. Meaning of 'inaccurate' * The general meaning of the term 'inaccurate' is "not accurate; not correct". * Kind attention of your honour in this regard is invited to the decision of the Supreme Court of India in the case of CIT vs Reliance Petroproducts (P) Ltd [2010] 322 ITR 158/189 Taxman 322 (SC) wherein it was observed that merely because the disallowance made by the assessing officer is upheld by the appellate authorities, that in itself will not make the assessee liable to penalty under section 271(1)(c) of the ....
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.... that no information given in the Return was found to be incorrect or inaccurate. It is not as if any statement made or any detail supplied was found to be factually incorrect. Hence, at least, prima facie, the assessee cannot be held guilty of furnishing inaccurate particulars. The Learned Counsel argued that "submitting an incorrect claim in law for the expenditure on interest would amount to giving inaccurate particulars of such income". We do not think that such can be the interpretation of the concerned words. 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 inaccurate particulars.........................." (emphasis supplied) * Reliance in this regard is also placed on the decision of the Gujarat High Court in the case of Nayan C. Shah vs Income-tax Officer [2016] 69 taxmann.com 256 (Gujarat), relevant extracts are produced below: "...it appears that the assessee has made a claim of expenditure in relation to the payments made, which he m....
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....nt is a revenue expenditure allowable u/s 37(1). The AO however, held it to be capital expenditure but the Ld. CIT(A) and the Hon'ble ITAT accepted that the expenditure is revenue in nature but considering that mineral would be extracted over a period of 20 years, directed to allow the above expenditure over 20 years and thereby, allowing deduction of Rs. 19,60,160/-. Thus, the appellate authorities have also held that the expenditure is revenue in nature but since its benefit may accrue over 20 years, the expenditure was allowed to be claimed over this period. This itself establishes that the explanation furnished by the Respondent for claim of expenditure was bonafide and all material facts for computation of total income are disclosed and no inaccurate particulars were furnished. It is not the case of the AO that the explanation so furnished by the Respondent is false or malafide or the particulars furnished by it is inaccurate. Penalty levied for AY 2010-11 to 2012-13 was deleted by the CIT(A) and appeal filed to ITAT was dismissed due to low tax effect 16. It is further submitted that similar penalty imposed by the AO for AY 2010-11 to 2012-13 was deleted....
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.... filing the income tax return which was treated as a deferred revenue expenditure in the books of accounts. The AO did not allow the claim of the assessee and made addition of the said amount. Against the assessment order, the assessee did not file an appeal. The AO levied penalty under section 271(1)(c) of the Act. The ITAT deleting the penalty held as under: "7.2 Thus, assessee had itself treated the expenditure having enduring benefit but did not capitalize on the ground that website did not construe to be an intangible asset. Therefore, the whole amount was charged to profit and loss account. Thus, assessee had given detailed reasons for claiming the whole amount as revenue expenditure. The same has not been found to be wrong. The assessee had disclosed in the audited balance sheet accompanying its return of income, details pertaining to the claim of this expenditure. Therefore, it cannot be inferred that assessee had furnished inaccurate particulars of income." In view of the above detailed submission, it is submitted that the order of the NFAC deleting penalty levied under section 271(1)(c) of the Act be upheld." 5. We have heard both the parties....