Case Law Details
Bhartiya City Developers Pvt. Ltd Vs Addl. CIT (ITAT Delhi)
A conspectus of Explanation-1 to Section 271(1)(c) of the Act, makes it clear that the statute visualizes the assessment proceedings and penalty proceedings to be wholly distinct and independent of each other. While the Assessing Officer may be justified in making estimated disallowance in quantum proceedings, such disallowance of expenses and that too on estimated basis and further substantially reduced in the appellate proceedings, could not automatically fall within the mischief of Section 271(1)(c) of the Act on the grounds of concealment etc. While the claim towards expenditure may not be found acceptable in quantum proceedings, such disallowance per se cannot invite rigors of penalty. Where all material facts relevant to the issue were placed on record, mitigating circumstances to disprove any culpability of any sort against the assessee is established by implication. The claim of expenditure towards exempt income made, at best, be taken as erroneous claim by the assessee. Such claim, although, may not be maintainable for the purposes of quantum proceedings, however would not invite penalty in the absence of falsity per se.
The Hon’ble Apex Court in the case of CIT vs. Reliance Petroproducts Pvt. Ltd. as reported in 322 ITR 158 (SC) held that penalty under Section 271(1)(c) is not leviable for ad hoc disallowance made on estimated basis in the absence of any element of falsity per se. It was observed that in the absence of any finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false, there is no question of inviting the penalty under Section 271(1)(c) of the Act. It was further observed that a mere making of 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 amounts to furnishing inaccurate particulars.
In view of the aforesaid deliberations, the impugned order of the CIT(A) is set aside and the Assessing Officer is directed to delete the penalty in question.
FULL TEXT OF THE ORDER OF ITAT DELHI
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