ACIT Vs IKEA Trading (India) Pvt. Ltd. (ITAT Delhi)
We find that the assessee has sold assets at the WDV of the assets as per company law whereas the TPO held that the assessee ought to have sold the assets at the value of the WDV of the block of assets as per the Income Tax Act. The WDV as per the Income Tax Act may not be /cannot be the fair market value of the assets. The assets were transferred at the book value as per the audited accounts of the assessee which is a recognized method of providing depreciation. Such sale of assets after valuation and the adjustment by the TPO by resorting to CUP method cannot be a ground for levy of penalty u/s 271(1)(c). The case of concealment or furnishing of inaccurate of particulars of income cannot attract the provisions of penalty u/s 271(1)(c). Hence, we hold that penalty levied on this ground has been rightly deleted by the ld. CIT (A).
Penalty on the issue of disallowance of expenses:
Mere fact that a claim for expenditure stands disallowed does not by itself lead to the inference that the assessee had furnished inaccurate particulars in regard to that item.
Further, the Hon’ble Supreme Court in the case of Reliance Petorproducts Pvt. Ltd. 322 ITR 158 (2010) held that “inaccurate” and “particulars” in conjunction, they must mean the details supplied in the return, which are not accurate, not exact or correct, not according to truth or erroneous. In this case, there is no finding that any details supplied by the assessee in its return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under section 271(1)(c). Mere 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.
On going through the entire facts and circumstances of the case, we hereby confirm the order of the ld. CIT (A) which held that it a “mere disallowance” of an expense does not warrant a penalty for filing inaccurate particulars of income u/s 271(1)(c).
