Question And Answer
Subject: Penalty U/SEc. 271(1)(c) of the Act
Querist: prakash
Answered by:
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Date: April 2, 2024
Query asked by prakash

Assessee is private limited co and during the course of assessment proceedings AO made the addition U/SEc.14A, Write off advances to 100% subsidiary co established in China and non submission of receipt of donation. CIT A confirm all the additions . ITAT has reduced the disallowance U/sec. 14A to the extent of exempt income. and confirm the addition made by the AO . on the ground of writeoff of advances to subsidiary co on the ground that the assessee failed to substantiate the claim made by the co. AO has levied the Penalty U/SEc. 271(1) (c) for furnishing of inaccurate particulars of income.

whether it is justified in law

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Answer given by

When the claims and figures are noticeable to the Assessing officer concerning the disallowance, then there is no failure on the part of the Assessee for concealment or furnishing inaccurate particulars of income which leads to a penalty under section 271(1)(c ).

Further, when the assessee preferred a claim, it was up to the authorities to accept its claim in the return or not, but 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 Section 271(1)(c) of the Act.

Where the Tribunal has reduced disallowance of certain expenses made by the Assessing Officer, a penalty under section 271(1)(c) could not be sustained on that account. Refer CIT v. Reliance Petroproducts (P) Ltd. (2011) 220 Taxation 278/(2010) 36 DTR 449/322 ITR 158/189 Taxman 322/230 CTR 320 (SC), Price Waterhouse Coopers Pvt. Ltd. v. CIT (2012) 348 ITR 306/253 CTR 1/77 DTR 153/211 Taxman 40 (SC)

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