INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Assessee furnished inaccurate particulars of income - Disallowance of consultancy fees paid -

AO disallowed a sum on account of professional charges in respect of consultancy fees paid to a pharma company for the reason that bill did not contain nature of service rendered by the said party to assessee. Similarly, AO also disallowed proportionate interest expenditure on the ground that unsecured loan borrowed by assessee on which interest was paid, was partially utilized for capital work-in-progress of assessee. AO levied penalty under section 271(1)(c) only on the disallowance of consultancy fees paid to a pharma company. Assessee submitted that description of bills specifically contained that payment was made by assessee for conducting Goods Manufacturing Practice Audit and copy of the audit report was also placed on record before authorities during the course of penalty proceedings Held: Assessee had furnished entire details indicating nature of services rendered by Pharma company together with copy of GMP audit report thereon during the course of penalty proceedings. These details were not appreciated by authorities during the penalty proceedings. Assessee had duly furnished all relevant details during the course of penalty proceedings. Moreover, mere disallowance of expenditure for non-appreciation of relevant facts would not result in levy of penalty and accordingly same was deleted.

Followed:CIT v. Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158 (SC) : 2010 TaxPub(DT) 1683 (SC)

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

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