Case Law Details
Kekri Cooperative Marketing Society Vs ITO ( ITAT Jaipur)
ITAT Jaipur held that disallowance of expenses per se cannot mean that the assessee has furnished incorrect particulars of income. Accordingly, penalty under section 271(1)(c) of the Income Tax Act not leviable.
Facts- The assessee claimed deduction under various sub-section of 80P of the Act. However, the AO after verification of the records restricted the allowance of deduction u/s 80P of the Act and he was of the view that the business activities carried out by the assessee are not falling under the category of eligible activities and thus as per his view the assessee had concealed particulars of income and consequently the AO levied penalty.
Conclusion-It is settl ed legal position that disallowance of expenses will not per se amount to furnishing inaccurate particulars of income, merely because the assessee had claimed expenditure which claim was not accepted or was not acceptable to revenue, that by itself would not attract penalty u/s 271(1)(c) of the Act.
Held that disallowance of expenses per se cannot mean that the assessee has furnished incorrect particulars of income. Concealment involves penal action. It has to be proved as a conscious act. Although it is true that direct evidence may not be available in every case yet it must be proved as a necessary corollary from the fact and circumstances established on record. In view of the above deliberation, the appeal of the assessee is allowed.
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