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Income Tax Appellate Tribunal, MUMBAI BENCH “E”, MUMBAI
Before: SHRI P.K. BANSAL & SHRI PAWAN SINGH
This appeal has been filed by the Revenue against the order of CIT(A) dated 13.9.2013 by which CIT(A) deleted the penalty imposed on the assessee u/s 271(1)(c) of the Income Tax Act, 1961 (in short ‘the Act’) by the Assessing Officer.
The brief facts of the case are that the Assessing Officer levied penalty on the assessee u/s 271(1)(c) of the Act in respect of disallowance of advertisement and business promotion expenses amounting to Rs.2,75,07,748/-. In the returned loss, the Assessing
2 M/s. Sanofi Pasteur India Pvt. Ltd.
Officer initiated penalty for furnishing of inaccurate particulars of income which led to concealment of taxable income and ultimately, levied penalty by applying Explanation 1(B) to Sec. 271(1)(c) of the Act @ 100% of the tax sought to be evaded amounting to Rs.16,24,045/-. When the matter went before CIT(A), CIT(A) deleted the penalty.
We heard the rival submissions and carefully considered the same alongwith the order of tax authorities below. We noted that the assessee has debited a sum of Rs.2,75,07,748/- under the head ‘advertisement and business promotion expenses’ and claimed it as revenue expenditure, but the Assessing Officer took the view that this expenditure was capital expenditure because of its benefit of enduring nature. The CIT(A) confirmed the addition only of Rs.48,33,470/- and deleted the balance addition. The Assessing Officer levied penalty u/s 271(1)(c) of the Act by applying Explanation 1(B) to Sec. 271(1)(c) of the Act on 100% of the tax sought to be evaded amounting to Rs.16,24,045/-. Now, the question arises whether it can be said that the assessee has concealed the particulars of income. This is a case where the assessee has claimed deduction in respect of expenditure which was disallowed by the Assessing Officer. Mere making of claim which is not sustainable in law by itself, in our view, cannot be regarded to be concealment of particulars of income. Our aforesaid view is duly supported by the decision of Hon'ble Supreme Court in the case of CIT vs. Reliance Petroproducts Pvt. Ltd., 322 ITR 158 (SC) and the order of Ahmedabad bench of the Tribunal in the case of ACIT vs. Reliance Petroproducts Pvt. Ltd. of which the undersigned was the author, in which it was held that merely because
3 M/s. Sanofi Pasteur India Pvt. Ltd. assessee had claimed expenditure, which claim was not accepted, or was not acceptable to the Revenue, that by itself would not attract penalty u/s 271(1)(c) of the Act. Since the case of assessee is duly covered by the decision of the Hon'ble Supreme Court, we, therefore, confirm the order of CIT(A) deleting the penalty imposed u/s 271(1)(c) of the Act.
In the result, appeal filed by the Revenue stands dismissed.
Order pronounced in the open court on 23rd December, 2016.