RAM KISHORE MEENA, ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-2,, KOTA vs. MANGALAM CEMENT LTD, MORAK, KOTA

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR MkWa- ,l-lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA. No. 350/JPR/2024 fu/kZkj.k o"kZ@Assessment Years : 2013-14 The ACIT, cuke Mangalam Cement Limited Circle-2, Vs. Aditya Nagar Morak, Aditya Nagar, Kota. Kota. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AABCM6602Q vihykFkhZ@Appellant izR;FkhZ@Respondent jktLo dh vksj ls@ Revenue by : Smt. Monisha Choudhary (Addl.CIT)a fu/kZkfjrh dh vksj ls@ Assessee by : Shri Yogesh Parwal ( C.A.) lquokbZ dh rkjh[k@ Date of Hearing : 04/07/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 27/09/2024

vkns'k@ ORDER PER: DR. S. SEETHALAKSHMI, J.M.

This is an appeal filed by the Revenue directed against the order of the ld. CIT(A), National Faceless Appeal Centre, Delhi (hereinafter referred to as ‘CIT(A)/NFAC’) dated 25.01.2024 for the assessment year 2013-14 raising therein following solitary ground of appeal .

“1. Whether on the facts and circumstances of the case, the learned CIT(A), NFAC, Delhi was justified in deleting the imposition the penalty u/s 271(1)(c) of the I.T. Act, 1961 amounting to Rs. 1,26,58,910/-, in view of the fact that the Ld. CIT(A) had not treated the expenditure as ‘Revenue Expenditure’, which was to be allowed in the A.Y. Itself, BUT,

2 ITA No. 350 /JPR/2024 ACIT vs. Mangalam Cement Limited. he had allowed the expenditure to be of the nature of “Deferred Revenue Expenditure” benefit of which was directed to be given in 20 Assessment years from the impugned assessment year.” 2. Apropos solitary ground of appeal of the Revenue as to deletion of penalty u/s 271(1)C of the Act by the ld. CIT(A) who observed as under :-

“5.0 Decision and Reason: The submissions filed by the appellant and the order appealed against have been perused.

5.1 Vide its first two grounds of appeal the appellant has challenge the penalty imposed by AO of Rs.1,26,58,910/- u/s 271(1)(c) of Income Tax Act furnishing inaccurate particulars of income.

In the instant case the appellant had filed its return declaring total income of Rs. 94,26,39,610/- which was assessed at Rs. 103,64,96,763/- by making addition of Rs.9,41,02,253/-. In respect of all the additions made by the AO except on disallowance made out of certain expenses, penalty proceedings u/s 271(1)(c) was initiated for furnishing inaccurate particulars of income. After the order of CIT(A)/ ITAT, most of the additions were deleted except that disallowance of Rs. 3,72,43,045/- out of compensation of Rs.3.92,03,205/- paid to farmers for acquiring mining rights of the land was confirmed. On the above disallowance of Rs. 3,72,43,045/-, AO imposed the penalty of Rs.1,26,58,910/- by holding that the appellant had claimed the payment of compensation of land to farmers for mining use as revenue expenditure whereas in assessment the same is treated as capital expenditure.

5.1.2 In his submission the appellant has stated that:

"4. From the above facts, it can be noted that there is no dispute that the assessee has entered into separate agreements with the farmers forgetting consent from them to do mining on their land by paying compensation to them as they are deprived to do cultivation on such land. Therefore, the amount so paid is for extraction of limestone and not for acquiring any ownership right over the land. Hence, the expenditure incurred by assessee is a revenue expenditure allowable u/s 37(1). The AO however, held it to be capital expenditure but the Ld. CIT(A) and the Hon'ble ITAT accepted that the expenditure is revenue

3 ITA No. 350 /JPR/2024 ACIT vs. Mangalam Cement Limited. in nature but considering that mineral would be extracted over a period of 20 years, directed to allow the above expenditure over 20 years and thereby, allowing deduction of Rs. 19,60,160/-. Thus, the appellate authorities have also held that the expenditure is revenue in nature but since its benefit may accrue over 20 years, the expenditure was allowed to be claimed over this period. This itself establishes that the explanation furnished by the assessee for claim of expenditure was bona fide and all material facts for computation of total income are disclosed. It is not the case of the AO that the explanation so furnished by the assessee is false or mala fide or the particulars furnished by it is inaccurate. Hence, on such disallowance no penalty is leviable.”

5.1.3 Further, the appellant has relied on the decision of Hon'ble Supreme Court of India in the case of CIT Vs. Reliance Petro products Pvt. Ltd. 322 ITR 158. The relevant para of the Hon'ble Supreme Court's judgement as quoted by the appellant is reproduced as under:

“5. The Hon'ble Supreme Court in case of CIT Vs. Reliance Petro products Pvt. Ltd. 322 ITR158 held that the words "inaccurate" and "particulars" in conjunction mean the details supplied in there turn, which are not accurate, not exactor correct, not according to truth or erroneous. Where there is no 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). A 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. Such a claim made in the return cannot amount to furnishing inaccurate particulars. The assessee had furnished all the details of its expenditure as well as income in its return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the revenue, that by itself would not attract the penalty under s. 271(1)(c). If the contention of the revenue is accepted then in case of every return where the claim made is not accepted by AO for any reason, the assessee will invite penalty under sec. 271(1)(c). That is clearly not the intendment of the legislature."

The appellant has further submitted that:-

4 ITA No. 350 /JPR/2024 ACIT vs. Mangalam Cement Limited.

"The AO has tried to distinguish the above case by stating that this case is on different facts without elucidating how it is different from assessee's case and ignoring that the principle laid down in this case is squarely applicable to the facts of the assessee's case. Therefore, considering this decision no penalty u/s 271(1)(c) is leviable on the part disallowance of compensation paid to

5.1.4 The submissions of the appellant, judicial precedents and the order of the Ld. CIT(A), Kota have been perused.

In the instant case the appellant had claimed of Rs.3,92,03,205/- under the head compensation on acquiring mining rights in the return of income, which the assessing officer had disallowed by holding the expenditure as capital in nature. On appeal of the assessee, the Ld. CIT(A) had amortised the expenditure for the period of 20 years and allowed Rs.19,60,160/- in the relevant assessment year and confirmed the disallowance of Rs.3.72.43,045/- The order of the CIT(A) was confirmed by the Hon'ble ITAT.

Later the assessing officer has imposed penalty of Rs. 1,26,58,910/- u/s 271(1)(c) for furnishing inaccurate particulars of income.

5.1.5 In it's submission the appellant has relied on the judgment of Hon'ble Supreme Court of India in the case of CIT vs. M/s Reliance Petro products Pvt Ltd (322 ITR 158).

The facts of the case and submissions are considered. In the instant case there is disagreement between the appellant and Revenue in respect of the expenditure incurred on compensation for acquiring mining rights are revenue or capital. During the penalty proceedings, the appellant had relied upon the judgment of Hon'ble Supreme Court of India in the case of M/s CIT Vs Reliance Petro products Pvt. Ltd.(322 ITR 158). But the AO has distinguished it without citing any reason.

The Hon'ble Supreme Court in the aforesaid judgement has observed that:

"The Hon'ble Supreme Court in case of CIT Vs. Reliance Petro products Pvt. Ltd. 322 ITR 158 held that the words "inaccurate" and "particulars" in conjunction mean the details supplied in there turn, which are not accurate, not exactor correct, not according to truth or

5 ITA No. 350 /JPR/2024 ACIT vs. Mangalam Cement Limited. erroneous. Where there is no finding that any details supplied by the assessee in its return are found to be incorrect on erroneous or false there is no question of inviting the penalty under section 271(1)(c). A 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 Such a claim made in the return cannot amount to fumishing inaccurate particulars. The assessee had furnished all the details of its expenditure as well as income in its return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the revenue, that by itself would not attract the penalty under s. 271(1)(c). If the contention of the revenue is accepted then in case of every return where the claim made is not accepted by AO for any reason, the assessee will invite penalty under sec. 271(1)(c). That is clearly not the intendment of the legislature."

5.1.6 Further, on identical set of facts the Ld. CIT(A), Kota vide his order dated 12.03.2019 in Appeal No 315/17-18 for A.Y. 2012-13, has deleted the penalty imposed u/s 271(1)(c) of the Income Tax Act.

5.1.7 In view of the above and respectfully following the ratio laid down by the Hon'ble Supreme Court of India in the case of M/s Reliance Petro products Pvt. Ltd and for the reasons given by the Ld. CIT(A), Kota in his order dated 12.03.2019 for the A.Y. 2012-13, it is held that it is not a case of furnishing in accurate particulars of income and penalty u/s 271(1)(c) of the Income Tax Act is not leviable in the instant appeal.

Accordingly, the penalty of Rs.1,26,58,910/- imposed u/s 271(10(c) of the Income Tax Act is hereby deleted.

5.1.8 Thus, first two grounds of appeal are allowed. 5.2 Third ground of appeal is general in nature and it needs no separate adjudication. 6.0 Thus the appeal of the appellant is allowed.”

6 ITA No. 350 /JPR/2024 ACIT vs. Mangalam Cement Limited. letter dated 22-03-2024 issued from the office of ACIT,Circle-2, Kota which carry following main contents. ‘’Sub:-Appeal before Hon'ble ITAT Bench in CIT(A), Kota/10066/2018-19 & 25.01.2024 in the case of Mangalam Cement Ltd, PAN-AABCM6602Q) for the AY 2013-14- in grounds of appeal :-reg- Kindly refer to the above mentioned subject. In this connection, it is submitted that the CIT(A), has deleted penalty of Rs.1,26,58,910/- u/s 271(1)(c) imposed by the A.O. vide his order u/s 250 dated 25.01.2024. In this case, central scrutiny report on the said appellate order of CIT(A) has been submitted before the worthy Pr. Commissioner of Income Tax, Udaipur. Further, it has been directed by the worthy Pr. Commissioner of Income Tax Udaipur vide letter no.5536 dated 20/023/2024 to file appeal before the Hon'ble ITAT, Jaipur in against the order of CIT(A), Kota/10066/2018-19 vide 25.01.2024 in the case of Mangalam Cement Ltd, (PAN-AABCM66020) for the AY 2013-14 (copy enclosed). The tax effect on issues on which II Appeal Recommended comes to Rs. 1,26,58,910/- which is above the limit prescribed by the Board vide Circular No.17/2019 for filing appeal before the Hon'ble ITAT. Therefore, as per direction of the worthy Pr. Commissioner of Income Tax, Udaipur, Form no. 36 in the case of Mangalam Cement Ltd, (PAN- AABCM6602Q) for the AY 2013-14 is being sent for kind consideration and necessary action.’’ 4. At the time of hearing of the appeal, the ld. AR of the assessee relied upon order of the ld. CIT(A) and also filed following written submission

“This is with reference to the appeal filed by the Appellant (Department) against the order passed by the National Faceless Appeal Centre, Delhi (“NFApC”) deleting penalty of Rs 1,26,58,910 levied by the Ld AO. The following ground of appeal has been raised by the Appellant: Whether of facts and circumstances of the case, the learned CIT(A), NFAC, Delhi was justified in deleting the imposition of penalty u/s 271(1)(c) if the I.T.Act, 1961

7 ITA No. 350 /JPR/2024 ACIT vs. Mangalam Cement Limited. amounting to Rs 1,26,58,910 in view of the fact that the ld. CIT(A) has not treated the expenditure as ‘Revenue Expenditure’ which was to be allowed in the A.Y. itself, BUT, he had allowed the expenditure to be of the nature of “Deferred Revenue Expenditure” benefit of which was directed to be given in 20 Assessment Years from the Impugned assessment year. Facts:- 1. The Respondent filed return declaring total income of Rs.94,26,39,610/- which was assessed at Rs.103,64,96,763/- by making addition of Rs.9,41,02,253/-. In respect of all the additions made by the AO except on disallowance made out of certain expenses, penalty proceedings u/s 271(1)(c) was initiated for furnishing inaccurate particulars of income. 2. After the order of CIT(A)/ ITAT, most of the additions were deleted except Rs.3,72,43,045/- out of compensation of Rs.3,92,03,205/- paid to farmers for acquiring mining rights of the land. On the said disallowance, penalty of Rs. 1,26,58,910/- was imposed by the AO holding that Respondent has claimed the payment of compensation of land to farmers for mining use as revenue expenditure whereas in assessment the same is treated as capital expenditure. 3. The Respondent filed an appeal before the NFApC and the NFApC vide order dated 25 January 2024 allowed the appeal of the Respondent and deleted the penalty levied by the AO by holding as under: “5.1.7 In view of the above and respectfully following the ratio laid down by the Hon’ble Supreme Court of India in the case of M/s Reliance Petro products Pvt. Ltd and for the reasons given by the Ld. CIT(A), Kota in his order dated 12.03.2019 for the A.Y. 2012-13, it is held that it is not a case of furnishing in accurate particulars of income and penalty u/s 271(1)(c) of the Income Tax Act is not leviable in the instant appeal.” Against the order of the NFApC, the Appellant has filed an appeal before your honors Submission:- 4. The Respondent is engaged in the business of manufacturing of cement. Limestone is the primary raw material for manufacture of cement. It entered into mining lease agreement with the Govt. of Rajasthan in 1976-77 over a land of 895 hectare. In order to conduct mining in the area so as to extract

8 ITA No. 350 /JPR/2024 ACIT vs. Mangalam Cement Limited. limestone, Respondent is required to obtain specific permission from the respective owners of the land to undertake the mining. For this, the Respondent is to make payment to them so that the limestone can be extracted. 5. During the year, the Respondent incurred expenditure of Rs.3,92,03,205/- towards compensation on acquiring mining rights over an area of 28.705 hectares of land of Schedule Caste/Schedule Tribes which was claimed as deduction u/s 37(1) of the Act as by making such payment it acquires no ownership right on the said land.The AO by referring to the registered deeds observed that as per one of the clause of this deed, the land owners have given the possession of land to the Respondent and they have no right on that land now and all the rights of khatedari/kashtkari which was available to them is transferred to Respondent. He, therefore, held that expenditure incurred by Respondent is to protect long term exploitation right over the mining land which is capital in nature. He also held that depreciation is not allowable as amount paid to farmers is on account of purchase of land for mining on which depreciation is not admissible. 6. The Ld. CIT(A) after relying on the findings of his predecessor for AY 2010- 11 and his own decision for AY 2012-13, directed the AO to allow the expenditure equally in 20 years including the current year, thereby allowing the expenditure of Rs.19,60,160/- out of Rs.3,92,03,205/- in the year under consideration and thus, confirmed the disallowance of Rs.3,72,43,045 which was to be allowed as an expenditure in balance 19 years. This finding of Ld. CIT(A) was upheld by the Hon'ble ITAT. Penalty not leviable as stand of granting deduction over 20 years was taken by the Ld AO himself for AY 2008-09. Also, penalty was not initiated in AY 2008-09. 7. It is submitted that the stand of allowing expenditure over 20 years by taken by the Ld AO himself for AY 2008-09 wherein the Ld AO held expenditure incurred is a capital expenditure because it has been incurred to protect a long-term exploitation right over huge area of mining land which falls in Reserved Forest. The Ld. AO held that it can at the best be allowed on prorate basis i.e. on the basis of exploitation which has already been made if any or otherwise on amortization basis for future exploitation. Considering the above the expenditure was allowed on the basis of assets already exploited and on the basis of prospective utilization. 8. Thus, when the Ld AO has himself held that the expenditure is a genuine expenditure and is for long-term exploitation right over huge area of mining

9 ITA No. 350 /JPR/2024 ACIT vs. Mangalam Cement Limited. land and is allowable on a pro-rata basis, it cannot be said that the Respondent has furnished any inaccurate particulars of income. Also, for AY 2008-09 no penalty proceedings were initiated by the Ld AO. The Respondent has not furnished any inaccurate particulars of income 9. Section 271(1)(c) of the Act reads as follows: “271. Failure to furnish returns, comply with notices, concealment of income, etc. (1)If the Assessing Officer or the Commissioner (Appeals) or the Commissioner in the course of any proceedings under this Act, is satisfied that any person - (a) … (b) …, or (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, or (d) … He my direct that such person shall pay by way of penalty: (i) … (ii) … (iii) In the cases referred to in clause (c) or clause (d), in addition to tax, if any, payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of income of his income or fringe benefits or the furnishing of inaccurate particulars of such income or fringe benefits. ……” (emphasis supplied) 10. A plain reading of the provisions of section 271(1)(c) makes it amply clear that so far as scheme of penalty under this section is concerned, it is a sine qua non for imposition of penalty that the designated authorities during the course of any proceedings before them, should be satisfied that an assessee has:  concealed the particulars of his income; or  furnished inaccurate particulars of his income.

10 ITA No. 350 /JPR/2024 ACIT vs. Mangalam Cement Limited. 11. Only when the aforesaid conditions exists, the designated authorities may direct levy of penalty on the assessee. The expressions ‘concealed the particulars of income’and ‘furnishing inaccurate particulars of income’have not been defined in the section or elsewhere in the Act. Therefore, reliance is placed on the principles arising out of judicial precedents for ascertaining their connotation. Since, the Ld. AO has levied penalty for furnishing inaccurate particulars of income, the same is analyzed as under: 12. Meaning of ‘inaccurate’  The general meaning of the term ‘inaccurate’ is “not accurate; not correct”.  Kind attention of your honour in this regard is invited to the decision of the Supreme Court of India in the case of CIT vs Reliance Petroproducts (P) Ltd [2010] 322 ITR 158/189 Taxman 322 (SC) wherein it was observed that merely because the disallowance made by the assessing officer is upheld by the appellate authorities, that in itself will not make the assessee liable to penalty under section 271(1)(c) of the Act. Further, the apex court held that the word used is ‘inaccurate particulars’ which is clearly different from ‘inaccurate claim’. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. Since the assessee had furnished all the details of its expenditure as well as income in its return of income, which in themselves were not found to be inaccurate, it could not be viewed as the concealment of income on part of the assessee. It was up to the authorities to accept its claim in the return or not. The relevant observations of the Apex Court in the said case are reproduced below for the ready reference of your goodself as below: “7. As against this, Learned Counsel appearing on behalf of the respondent pointed out that the language of Section 271(1)(c) had to be strictly construed, this being a taxing statute and more particularly the one providing for penalty. It was pointed out that unless the wording directly covered the assessee and the fact situation herein, there could not be any penalty under the Act. It was pointed out that there was no concealment or any inaccurate particulars regarding the income were submitted in the Return. Section 271(1)(c) is as under:- 271(1) If the Assessing Officer or the Commissioner (Appeals) or the

11 ITA No. 350 /JPR/2024 ACIT vs. Mangalam Cement Limited. Commissioner in the course of any proceedings under this Act, is satisfied that any person- (c) has concealed the particulars of his income or furnished inaccurate particulars of such income." A glance at this provision would suggest that in order to be covered, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. Present is not the case of concealment of the income. That is not the case of the Revenue either. However, the Learned Counsel for Revenue suggested that by making incorrect claim for the expenditure on interest, the assessee has furnished inaccurate particulars of the income. As per Law Lexicon, the meaning of the word "particular" is a detail or details (in plural sense); the details of a claim, or the separate items of an account. Therefore, the word "particulars" used in the Section 271(1)(c) would embrace the meaning of the details of the claim made. It is an admitted position in the present case that no information given in the Return was found to be incorrect or inaccurate. It is not as if any statement made or any detail supplied was found to be factually incorrect. Hence, at least, prima facie, the assessee cannot be held guilty of furnishing inaccurate particulars. The Learned Counsel argued that "submitting an incorrect claim in law for the expenditure on interest would amount to giving inaccurate particulars of such income". We do not think that such can be the interpretation of the concerned words. The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars……………………..” (emphasis supplied)  Reliance in this regard is also placed on the decision of the Gujarat High Court in the case of Nayan C. Shah vs Income-tax Officer [2016] 69 taxmann.com 256 (Gujarat), relevant extracts are produced below: “…it appears that the assessee has made a claim of expenditure in relation to the payments made, which he may not have been entitled to claim in view of the provisions of section 40(a)(ia), as tax on part of such amount had not been deducted at source and deposited in the

12 ITA No. 350 /JPR/2024 ACIT vs. Mangalam Cement Limited. Government account before the due date for filing return income. However, as held by the Supreme Court in the above decision, merely submitting an incorrect claim in law for the expenditure would not amount to furnishing inaccurate particulars of income. The impugned order passed by the Tribunal, therefore, cannot be sustained.” 13. Meaning of ‘particulars’  General meaning of ‘particulars’ is “details”.  The Hon’ble Supreme Court in the case of CIT vs Reliance Petro products Pvt Ltd (supra), inter-alia, stated as follows: “As per Law Lexicon, the meaning of the word "particular" is a detail or details (in plural sense); the details of a claim, or the separate items of an account. Therefore, the word "particulars" used in the Section 271(1)(c) would embrace the meaning of the details of the claim made.” 14. In the instant case, penalty for furnishing inaccurate particulars of income is not attracted as the Respondent has not furnished any inaccurate details in its return of income, tax audit report, and audited financial statements. The Respondent had claimed deduction of Rs 3,72,43,045 as revenue expenditure entirely which the appellate authorities allowed it over a period of 20 years stating that the benefit of expenditure will accrue over 20 years. The Hon’ble Supreme Court of India in the case of CIT vs Reliance Petroproducts (P) Ltd [2010] 322 ITR 158/189 Taxman 322 (SC) held that the word used is ‘inaccurate particulars’ which is clearly different from ‘inaccurate claim’. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. The NFApC has also by placing reliance on the decision of the Hon’ble Supreme Court of India in the case of CIT vs Reliance Petroproducts (P) Ltd(supra) held that penalty under section 271(1)(c) of the Act for furnishing of inaccurate particulars of income is not leviable. Thus, the order of the NFApC be directed to be upheld. Expenditure incurred is revenue in nature 15. It is submitted that the amount so paid is for extraction of limestone and not for acquiring any ownership right over the land. Hence, the expenditure incurred by Respondentis a revenue expenditure allowable u/s 37(1). The AO however, held it to be capital expenditure but the Ld. CIT(A) and the Hon'ble ITAT accepted that the expenditure is revenue in nature but

13 ITA No. 350 /JPR/2024 ACIT vs. Mangalam Cement Limited. considering that mineral would be extracted over a period of 20 years, directed to allow the above expenditure over 20 years and thereby, allowing deduction of Rs.19,60,160/-. Thus, the appellate authorities have also held that the expenditure is revenue in nature but since its benefit may accrue over 20 years, the expenditure was allowed to be claimed over this period. This itself establishes that the explanation furnished by the Respondent for claim of expenditure was bonafide and all material facts for computation of total income are disclosed and no inaccurate particulars were furnished. It is not the case of the AO that the explanation so furnished by the Respondent is false or malafide or the particulars furnished by it is inaccurate. Penalty levied for AY 2010-11 to 2012-13 was deleted by the CIT(A) and appeal filed to ITAT was dismissed due to low tax effect 16. It is further submitted that similar penalty imposed by the AO for AY 2010-11 to 2012-13 was deleted by Ld. CIT(A) vide order dt. 11.03.2019 & 12.03.2019. Further, the appeal filed by the revenue against the favourable order of the CIT(A) was dismissed by the ITAT on account of low tax effect. Thus, when on the same issue, penalty has been deleted by Ld. CIT(A) and the ITAT, no penalty is leviable. Penalty under section 271(1)(c) cannot be levied on deferred revenue expenditure or capital expenditure vs revenue expenditure 17. Reliance in this regard is placed on the following decisions wherein it has been held that penalty under section 271(1)(c) of the Act is not leviable on an expenditure which is treated either as a capital expenditure or as a deferred revenue expenditure  Simplex Pharma (P) Ltd. vs. DCIT (2011) 11 ITR 576: In the instant case, the assessee had paid an amount of Rs. 5,22,591 as feesand drug registration charges. The details whereof were placed before AO. The expenses have beenheld to be genuine. Allthe details of registration were filed before AO, who held that the Revenue expenditure of Rs. 52,000pertains to this year and balance amount of Rs. 4,70,591 was treated as deferred expenditure qua whichpenalty proceedings under s. 271(1)(c) were initiated. The ITAT deleting the penalty held as under: “6. We have heard the rival contentions and perused the material on

14 ITA No. 350 /JPR/2024 ACIT vs. Mangalam Cement Limited. record. The drug registration fee paid by the assessee for sale in foreign market has been held to be genuinely incurred. AO held only part of it allowable as revenue expenditure. In our view, penalty should not be levied merely because it is lawful to do so, as held by Hon’ble Supreme Court in the case of Hindustan Steel Ltd. vs. State of Orissa (1972) 83 ITR 26 (SC). Looking at entirety of facts and circumstances, in our view, a clear and bona fide debate existed vis-a-vis assessee incurring expenses on drug registration fees being capital or revenue. With this bona fide debate, it cannot be held that assessee furnished inaccurate particulars or concealed the particulars in respect of these expenses. In our view, the assessee’s case by no means calls for imposition of penalty under s. 271(1)(c) which is deleted.“  Onicra Credit Rating Agency of India Ltd. [TS-320-ITAT-2013(DEL)] In the instant case, the assessee claimed expenditure on website development of Rs 84,76,603 as revenue expenditure while filing the income tax return which was treated as a deferred revenue expenditure in the books of accounts. The AO did not allow the claim of the assessee and made addition of the said amount. Against the assessment order, the assessee did not file an appeal. The AO levied penalty under section 271(1)(c) of the Act. The ITAT deleting the penalty held as under: “7.2 Thus, assessee had itself treated the expenditure having enduring benefit but did not capitalize on the ground that website did not construe to be an intangible asset. Therefore, the whole amount was charged to profit and loss account. Thus, assessee had given detailed reasons for claiming the whole amount as revenue expenditure. The same has not been found to be wrong. The assessee had disclosed in the audited balance sheet accompanying its return of income, details pertaining to the claim of this expenditure. Therefore, it cannot be inferred that assessee had furnished inaccurate particulars of income.” In view of the above detailed submission, it is submitted that the order of the NFAC deleting penalty levied under section 271(1)(c) of the Act be upheld.”

15 ITA No. 350 /JPR/2024 ACIT vs. Mangalam Cement Limited. 5. We have heard both the parties and perused the materials available on record. The AO has levied penalty of Rs. 1,26,58,910/- u/s 271(1)(c) of the Act for furnishing inaccurate particulars of income. In the return of income, the Assessee claimed deduction of Rs 3,92,03,205 on account of compensation paid to farmers for acquiring mining rights of the land. In the assessment proceedings, the AO allowed the expenditure over 20 years and therefore made addition of Rs 3,72,43,045. Thus, the undisputed fact is that the expenditure claimed by the Assessee is allowable expenditure. The details of the expenditure were furnished by the assessee in the return of income as well as during the course of assessment proceedings. The ld. CIT(A) allowed the appeal of the assesee by placing reliance on the order the Hon’ble Supreme Court of India in the case of M/s Reliance Petro products Pvt. Ltd (supra) holding that the it is not a case of furnishing inaccurate particulars of income and penalty u/s 271(1)(c) of the Income Tax Act is not leviable. The Hon’ble Supreme Court of India in the case of M/s Reliance Petro products Pvt. Ltd has held that furnishing inaccurate particulars of income means furnishing wrong details of income and further held that making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. The Assessee has not furnished any inaccurate particulars in return of income and the claim of revenue expenditure was allowed in 20 years as against in the year itself. Thus, expenditure was allowed on a deferred basis. Also, the Delhi Bench of ITAT in case of Simplex Pharma (P) Ltd. vs. DCIT (2011) 11 ITR 576 and Onicra Credit Rating Agency of India Ltd. [TS-320-ITAT-2013 (DEL)] had deleted the penalty levied under section 271(1)(c) of the Act on deferred revenue expenditure. In view of the above facts and circumstances of the case and the case

16 ITA No. 350 /JPR/2024 ACIT vs. Mangalam Cement Limited. laws (supra), we concur with the findings of the Ld. CIT(A). Thus, solitary ground of the revenue is dismissed

In the result, the appeal of revenue is dismissed. Order pronounced in the open Court on 27/09/2024.

Sd/- Sd/- ¼ jkBksM deys'k t;UrHkkbZ ½ ¼,l-lhrky{eh½ (RATHOD KAMLESH JAYANTBHAI) (Dr. S. Seethalashmi) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 27/09/2024. *Santosh आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- ACIT, Circle-2, Kota. 2. izR;FkhZ@ The Respondent- Mangalam Cement Ltd., Kota. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 6. xkMZ QkbZy@ Guard File { ITA No. 350/JPR/2024} vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेजज. त्महपेजतंत