INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Addition on account of foreign fluctuation loss and on account of disallowance under section 40(a)(ia) - Imposition of -

Assessee was engaged in the business of Waterproofing, restoration and civil contract works. Assessee had debited an amount as foreign exchange loss under the head administrative and selling expenses. On verification, the claim of assessee was not found justifiable, therefore, the said claim was declined and added to income of assessee. Assessee was also asked to prove the claim of deduction under section 40(a)(ia) but he failed to prove the claim regarding certain expenses, therefore, the same was also disallowed. In connection with declining the claim on account of loss of foreign expenses and on account of non-payment of TDS, penalty proceedings under section 271(1)(c) was initiated. CIT(A) confirmed the order of AO. Held: Undoubtedly penalty was levied on account of disallowance of the claim of loss of foreign exchange and disallowance of claim under section 40(a)(ia). Assessee nowhere concealed the income or furnished inaccurate particulars of income. Disallowance of claim of the assessee nowhere attracted the penalty. Therefore, order of CIT(A) was quashed and penalty was deleted.

Followed:CIT v. Reliance Petroproducts (P) Ltd. (2010) 322 ITR 158 (SC) : 2010 TaxPub(DT) 1683 (SC) ACIT v. Seaways Shipping Ltd. [ITA No. 80/H/2011, dt. 17-6-2011] : 2011 TaxPub(DT) 1578 (Hyd Trib)Relied:CIT v. Lakhani India Ltd. (2010) 324 ITR 73 (P&H) : 2010 TaxPub(DT) 0279 (P&H-HC) CIT v. Ajaib Singh & Co. (2002) 253 ITR 630 (P&H) : 2002 TaxPub(DT) 0548 (P&H-HC)

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

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