INCOME TAX ACT, 1961

section 271(1)(c)

Penalty under section 271(1)(c) - Justification - Disallowance of expenditure claimed by assessee -

AO had levied penalty under section 271(1)(c) on disallowance of pre-operative expenses and interest income. Assessee submitted that it had declared true and correct return and had not concealed income nor given inaccurate particulars of income. Held: AO disallowed loss claimed by assessee and treated it as 'pre-operative expenditure'. AO also brought to tax interest income as income from other sources. Assessee had disclosed facts and there was no dispute about it. Accordingly, merely because assessee had claimed expenditure, which claim was not accepted or was not acceptable to revenue, that by itself would not attract penalty under section 271(1)(c).

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