FOODS AND INNS LIMITED ,MUMBAI vs. DCIT, CIRCLE 2(1)(1), MUMBAI
Income Tax Appellate Tribunal, MUMBAI BENCH “F” MUMBAI
Before: SHRI OM PRAKASH KANT () & SHRI RAJ KUMAR CHAUHAN () Assessment Year: 2015-16
PER OM PRAKASH KANT, AM
This appeal by the assessee is directed against order dated
16.06.2025 passed by the Ld. Commissioner of Income-tax
(Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld.
CIT(A)’] for assessment year 2015-16 in relation to penalty u/s 271(1)(c) of the Income-tax Act, 1961 (in short ‘the Ld. CIT(A)’] levied by the Assessing Officer.
2. The grounds raised by the assessee are reproduced as under:
On the facts a erred in confi
Income Tax A a. On the issu
(net) on the bo on account of depreciation i fact that no in the assessee of section 271
b. without ap finding or rea furnished in furnished by c. In disrega mechanical a without estab incorrect or fa d. In uphold
Honourable A Private Limite
161 Taxmann
3. Briefly stated, business of manufac aseptic fruit pulp an year under considera
Income-tax Act, 1961
3.1 During the ass disallowed an amou incurred on borrow assets, holding the s of the Act. The said d
ITA and circumstances of the case and in la firming the penalty order passed u/s 27
ct by the National Faceless Assessment C ue of disallowance of Rs 3,85,310/- bein orrowed funds u/s 36(1)(iii) of the Income f capitalization without appreciating that is allowed by AO from the disallowed in naccurate particulars of income have been within the meaning of Explanation 1 to 1(1)(c) of the Income Tax Act.
ppreciating that the penalty order had n asons of coming to the conclusion that accurate particulars of income or th the assessee are false or misleading or e arding that penalty order has been and routine manner without application blishing that the explanation offered by th alse.
ding the penalty order by ignoring the Apex Court in the cases of Reliance P ed (2010) 322 ITR 158 (SC) and Dilip N S n 218 (SC).
the assessee company is e cturing and export of fruit powd nd canned vegetables. The asse ation was completed under secti
1 on 08.12.2017. sessment proceedings, the As unt of ₹3,09,360/- being inter wed funds utilised for acquisi ame to be not allowable under disallowance was confirmed by t
Foods and Inns Ltd
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A No. 4629/MUM/2025
aw CIT (A) has 71(1) (C) of the Centre - ng the interest e Tax Act 1961
Hon’ble Supreme Co
(322 ITR 158), to co amount to furnishing
ITA n the quantum proceedings. No assessee against the quantum a the Assessing Officer issued
2021 proposing levy of penalty t. The Assessing Officer obs med interest expenditure on b on of capital assets, which, ac l the date such assets were put ad furnished inaccurate particu r levied penalty at 100% of the t o ₹1,19,060/-.
ned Commissioner of Income-ta that the claim of interest expend at no false or inaccurate pa bmitted that the borrowed fund sets forming part of the existin represented expansion and imp ing process, and not extension erefore, argued that the claim w ce thereof could not ipso facto
(c). Reliance was placed on the j ourt in CIT v. Reliance Petropr ntend that mere rejection of a g of inaccurate particulars of inc
Foods and Inns Ltd
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o further appeal addition.
a show-cause y under section served that the borrowed funds ccording to him, to use. Holding ulars of income, tax sought to be ax (Appeals), the diture was made articulars were ds were utilised ng business and provement of the of a new line of was a debatable attract penalty judgment of the roducts Pvt. Ltd.
claim does not come.
1 The learned CIT assessee and confi disallowance had bee of penalty was jus reproduced as under “In view of a that the appe of the AO in a interest incur being treated penalty for fu find no infirm of Rs. 1,19,06 the I.T Act sta dismissed.” 5. We have heard t material available on 5.1 At the outset, w initial notice, referr furnishing inaccurate cause notice as well exact limb under se levied. Such ambigui vitiates the levy itself 5.2 Even otherwise disclosed all mater expenditure. The dis ITA
T(A), however, rejected the con irmed the penalty, holding t en sustained in quantum proce stified.The relevant finding o r:
above order of CIT Appeal-4, Mumbai it llant is not lastly opposed the observation as much as the amount of Rs. 3,85,310/- red on the funds borrowed for acquiring d as disallowable expenses and attract urnishing inaccurate particulars of incom mity in the penalty order of the AO. Accord
60/- imposed invoking provision of sectio and confirmed. Accordingly the grounds o the rival submissions and carefu record.
we find that though the Assessin red to initiation of penalty p e particulars of income, the su as the penalty order do not cle ection 271(1)(c) under which t ity in the foundation of the pena f.
e, on merits, we find that the rial facts relating to the cla sallowance arose out of a differ
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ntentions of the that since the eedings, the levy of ld CIT(A) is is established n and decision
- on account of capital assets ts initiation of me Therefore, I dingly penalty on 271(1)(c) of of appeal are ully perused the ng Officer, in the proceedings for bsequent show- early specify the he penalty was alty proceedings e assessee had aim of interest rence of opinion regarding the allowa
Act, particularly on t constituted extensio existing business ope
5.3 The claim made false or devoid of any by the Assessing O either concealed pa particulars thereof.
debatable in nature.
5.4 It is well-settle
Petroproducts Pvt. Lt even if the claim is does not automatica long as the claim is b disclosed.
5.6 In view of the opinion that the levy the present case is n by the Assessing Of deleted.
ITA ability of interest under section the question whether the acqu on of business or merely exp erations.
e by the assessee cannot be sai y basis. No material has been br
Officer to demonstrate that the articulars of income or furnis
The issue is essentially inter d by the Hon’ble Supreme Co td. (supra) that mere disallowa ultimately found to be unsust ally attract penalty under secti bona fide and all relevant partic above discussion, we are of of penalty under section 271(1
not justified. Accordingly, the p fficer and confirmed by the le
Foods and Inns Ltd
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36(1)(iii) of the isition of assets pansion of the id to be ex facie rought on record e assessee had shed inaccurate rpretational and ourt in Reliance ance of a claim, tainable in law, on 271(1)(c), so culars have been the considered
)(c) of the Act in penalty imposed earned CIT(A) is 5.7 The grounds of 6. In the result, th
Order pronoun (RAJ KUMAR C
JUDICIAL M
Mumbai;
Dated: 15/12/2025
Rahul Sharma, Sr. P.S.
Copy of the Order forward
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.
////
ITA appeal of the assessee are accor he appeal of the assessee is allow ced in the open Court on 15/
S
CHAUHAN)
(OM PRAK
MEMBER
ACCOUNTA ded to :
BY ORDER
(Assistant Re
ITAT, Mu
Foods and Inns Ltd
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rdingly allowed.
wed.
12/2025. KASH KANT)
ANT MEMBER
R, gistrar) umbai