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Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI G.S. PANNU & SHRI AMARJIT SINGH
The captioned appeal by the assessee is directed against the order of CIT(A)-16, Mumbai dated 13.09.2013 pertaining to the Assessment Year 2006-07, which in turn has arisen from the order passed by the Assessing Officer, Mumbai dated 20.03.2012 u/s 271(1)(c) of the Income Tax Act, 1961 (in short ‘the Act’).
In this appeal, the only grievance of the assessee is against the order of the CIT(A) dated 13.09.2013 pertaining to Assessment Year
M/s. Aakash Stone Industries Ltd.
2006-07 wherein the penalty u/s 271(1)(c) of the Act amounting to Rs.1,30,680/- has been sustained.
In brief, the relevant facts are that the return of income was filed by the assessee on 28.11.2006 declaring an income of Rs.37,67,174/-, which was subject to a scrutiny assessment u/s 143(3) of the Act dated 15.12.2008 wherein the total income was assessed at Rs.59,09,878/- after making certain additions/disallowances. It is seen that out of the various additions/disallowances made, the Assessing Officer noted three additions, namely (i) sundry balances written off – Rs.2,57,379/-; (ii) ROC fee incurred for increase in authorised share capital – Rs.1,30,500/-; and (iii) loss on sale of car – Rs.366/-, which according to him were liable for penalty u/s 271(1)(c) of the Act. In an order passed u/s 271(1)(c) of the Act dated 20.03.2012, the Assessing Officer held that the assessee had furnished inaccurate particulars of income qua the aforesaid incomes and accordingly, levied penalty equivalent to 100% of the tax sought to be evaded on such income, which amounted to Rs.1,30,680/-. This penalty has been affirmed by the CIT(A), against which the assessee is in further appeal before us.
Insofar as the addition on account of sundry balances written-off is concerned, the learned representative pointed out that the Tribunal vide order in dated 04.01.2012 has set-aside the addition back to the file of the Assessing Officer. Therefore, in this background, we find no reasons to uphold the levy of penalty on the said aspect as the relevant addition itself does not survive.
M/s. Aakash Stone Industries Ltd.
Secondly, with regard to the disallowance of ROC fee paid for increase in authorised share capital, the learned representative contended that it was a debatable issue inasmuch as assessee has adopted a possible view of treating such expenditure as revenue expenditure, whereas the Assessing Officer has disallowed the same by treating it as a capital expenditure.
In this context, we find that the issue as to whether the ROC fee paid on account of increase in share capital is revenue or capital expenditure has been settled by the Hon'ble Supreme Court in the case of Brooke Bond India Ltd. vs. Commissioner of Income Tax, 225 ITR 798 (SC). The assessee has relied on the following judgments to support his case that treatment of the impugned expenditure as a revenue expenditure is a possible view :- i) CIT vs. Kisenchand Chellaram (India) P. Ltd., (1981) 130 ITR 385 (Madras High Court); ii) Warner Hindustan Ltd. vs. CIT, (1988) 171 ITR 224 (AP High Court); iii) Hindustan Machine Tools Ltd. (No. 3) vs. CIT, (1989) 175 ITR 220 (Karnataka High Court)
No doubt, the reliance placed by the assessee on the aforesaid decisions support the plea that the expenditure is revenue in nature, so however, the judgment of the Hon'ble Supreme Court in the case of Brooke Bond India Ltd. (supra) had settled the controversy that the expenditure is not revenue in nature. Therefore, the claim made by the M/s. Aakash Stone Industries Ltd. assessee in the return of income was ostensibly a wrong claim. So however, making of a wrong claim is not enough to fasten the penalty u/s 271(1)(c) of the Act. Something more is required, and in the present, there is nothing to show that assessee had concealed or furnished any inaccurate particulars of income on this aspect. Therefore, on this aspect also, we delete the levy of penalty.
The last aspect is with regard to the loss on sale of car of Rs.366/-. On this aspect, we find that it is a case where no particulars have been found to be inaccurately filed by the assessee and it is a case of mere disallowance of a claim which does not warrant levy of penalty u/s 271(1)(c) of the Act. Thus, on this aspect, the penalty is directed to be deleted.
In the result, order of the CIT(A) is set-aside and the Assessing Officer is directed to delete the levy of penalty, as indicated above.
In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 22nd November, 2017