ITAT Delhi Rules Against Penalty Section 271(1)(c) for Non-accepted Claims

Sabharwal Food Industries Pvt Ltd Vs DCIT (ITAT Delhi) Introduction: In a notable judgement, the Income Tax Appellate Tribunal (ITAT) Delhi has ruled in favor of Sabharwal Food Industries Pvt Ltd in its case against the Deputy Commissioner of Income Tax (DCIT). The ITAT held that penalties under section 271(1)(c) of the Income Tax Act cannot be imposed simply because a claim was not accepted. Analysis: The issue arose when the company made cash payments exceeding Rs. 20,000 on several occasions for medical expenses, a violation of section 40A(3) of the Act. Despite these payments being genuine...