The Supreme Court has dismissed the appeal of the income tax authorities who had insisted on imposing penalty on Reliance Petroproducts Ltd for alleged concealment of income and furnishing inaccurate particulars. The firm had claimed expenditure made for paying interest on loans incurred by it by which amount it bought IPL shares by way of its business policies. The revenue authorities, however, argued that the claim of interest expenditure was without legal basis and made with mala fide intentions. The Supreme Court, while rejecting these arguments, stated that “merely because the firm had claimed the expenditure, which was not accepted, that by itself would not attract penalty. If we accept the contention of the revenue authorities, in case of every return where the claim made is not accepted by the assessing officer, the assessee will invite penalty. This is clearly not the intention of the legislature.”
