TaxTMI 
TaxTMI 
TaxTMI 
2024 (10) TMI 586
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....sessment 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. 3,72,43,045/-, AO imposed the penalty of Rs. 1,26,58,910/- by holding that the app....
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....re 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 this case is on different facts without elucidating how it is different from assessee's case and ignoring that the princi....
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.... 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 above and respectfully following the ratio laid down by the Hon'ble Supreme Court of India in the case of M/s Reliance Petro products Pvt. Ltd and for the reasons given by the Ld. CIT(A....
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....ional 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 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. 2. After the order of CIT(A)/ ITAT, most of the additions were deleted except Rs. 3,72,43,045/- out of compensation of Rs. 3,92,03,205/....
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....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 allowing expenditure over 20 years by taken by the Ld AO himself for AY 2008-09 wherein the Ld AO held expenditure incurred is a capital expenditure because it has been incurred to protect a long-term exploitation right over huge area of mining land which falls in Reserved Forest. The Ld. AO held that it can at the best be allowed on prorate basis i.e. on the basis ....
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....ts 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 Act. Further, the apex court held that the word used is 'inaccurate particulars' which is clearly different from 'inaccurate claim'. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. Since the assessee had furnished all the details of its expenditure as well as income in its return of income, which in themselves were not found to be inaccurate, it could not be viewed as the concealment of income on part of the assessee. It was up to the au....
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.... 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 may not have been entitled to claim in view of the provisions of section 40(a)(ia), as tax on part of such amount had not been deducted at source and deposited in the Government account before the due date for filing return income. However, as held by the Supreme Court in the above decision, merely submitting an incorrect claim in law for the expenditure would not amount to furnishing inaccurate particulars of income. The impugned order passed by the Tribunal, therefore, cannot be sustained." 13. Meaning of 'particulars' * General meaning of 'particulars' is "de....
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....nished 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 by Ld. CIT(A) vide order dt. 11.03.2019 & 12.03.2019. Further, the appeal filed by the revenue against the favourable order of the CIT(A) was dismissed by the ITAT on account of low tax effect. Thus, when on the same issue, penalty has been deleted by Ld. CIT(A) and the ITAT, no penalty is leviable. Penalty under section 271(1)(c) cannot be levied on deferred revenue expenditure or capital expenditure vs revenue expenditure 17. Reliance in this regard is placed on the following decisions wherein it has been held that penalty under section 271(1)(c) of the Act is not leviable on an expenditure which is treated either as a ....
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.... 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 and perused the materials available on record. The AO has levied penalty of Rs. 1,26,58,910/- u/s 271(1)(c) of the Act for furnishing inaccurate particulars of income. In the return of income, the Assessee claimed deduction of Rs 3,92,03,205 on account of compensation paid to farmers for acquiring mining rights of the land. In the assessment proceedings, the AO allowed the expenditure over 20 years and therefore made addition of Rs 3,72,43,045. Thus, the undisputed fact is that the expenditure claimed by the Assessee is allowable expenditure. The details of the expenditure were furnished by the assessee in the return of income as well as during the course of assessment proceedings. The ld. CIT(A) allowe....