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Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL
Before: SHRI G.D. AGRAWALG.D. AGRAWAL & AND BEFORE SHRI G.D. AGRAWALG.D. AGRAWAL & AND SHRI SUDHANSHU SRIVASTAVA SHRI SUDHANSHU SRIVASTAVASHRI SUDHANSHU SRIVASTAVA SHRI SUDHANSHU SRIVASTAVA
PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP :- PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP This appeal by the assessee for the assessment year 2008-09 is directed against the order of learned CIT(A)-IV, New Delhi dated 21st June, 2013.
The only ground raised by the assessee in this appeal is against the levy of penalty of `3,72,177/- u/s 271(1)(c) of the Income-tax Act, 1961.
We have heard the arguments of both the sides and perused the material placed before us. The assessee has claimed the expenditure of `12,04,457/- on account of fees paid to the Registrar of Companies for increase in its share capital. The assessee claimed the same as revenue expenditure which was disallowed by the Assessing Officer
2 ITA-5212/Del/2013 treating the same as capital expenditure. The Assessing Officer also levied penalty thereon u/s 271(1)(c). In our opinion, the issue under consideration is squarely covered by the decision of Hon’ble Apex Court in the case of CIT Vs. Reliance Petroproducts Pvt.Ltd. – (2010) 322 ITR 158 (SC). In the said case, Hon’ble Apex Court held as under:-
“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 ratio of above decision of Hon’ble Apex Court would be squarely applicable to the facts of the assessee’s case. Admittedly, the details supplied by the assessee in its return of income are not found to be incorrect or erroneous or false. The Assessing Officer has disallowed fees paid to Registrar of Companies for increase in the share capital treating the same to be capital expenditure. Thus, it is a case where the assessee’s claim that the expenditure incurred is revenue expenditure is found by the Assessing Officer to be not sustainable in law. But, that, by itself, will not amount to furnishing of inaccurate particulars so as to expose the assessee to penalty u/s 271(1)(c) of the act. Accordingly, we, respectfully following the above decision of Hon’ble Apex Court, cancel the penalty levied u/s 271(1)(c) of the Act.
In the result, the appeal of the assessee is allowed. Decision pronounced in the open Court on 13.05.2016.