Difference in Income Declaration by Assessee and AO does not Amount to Furnishing Inaccurate Particulars: ITAT deletes Penalty u/s 271(1)(c) [Read Order]

The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has deleted the penalty under Section 271(1)(c) of the Income Tax Act, 1961 holding that the difference in income declaration by assessee and Assessing Officer would not amount to furnishing inaccurate particulars.

The assessee, Standard Radiators Private Ltd was a private limited company engaged in the business of manufacturing and selling of radiators. The AO during the proceedings found that the assessee had used borrowed money for giving advance towards the purchase of capital goods.

However, the assessee had not capitalised the interest attributable to such advance. Therefore, the AO disallowed the same and added to the total income of the assessee. The AO also initiated penalty proceedings under Section 271(1)(c) of the Income Tax Act for furnishing inaccurate particulars of income.

Viranchi Modi, who appeared on behalf of the assessee submitted that claim made by the assessee was genuine and the same was not doubted by the authorities below. However, the same was disallowed merely on the reasoning that it was to be capitalised.

Rakesh Jha,on behalf of the revenue contended that the assessee was not eligible for the deduction of the interest expenses. Therefore, the assessee had furnished inaccurate particular of income within the provisions of Section 271(1)(c) of the Income Tax Act.

The two-member Bench of Waseem Ahmed, (Accountant Member) and Siddhartha Nautiyal, (Judicial Member) observed that no allegation evidencing that the amount of expenses claimed by the appellant assessee was genuine or correct. As such, the AO had disallowed the same only for the reason that the interest expense was capital in nature.

The Bench thus deleted the penalty levied under Section 271(1)(c) of the Income Tax Act holding that AO had calculated different total income than the income declared by the assessee and the difference between the income declared by assessee and assessed by the AO would not amount to furnishing of inaccurate particulars of income or concealment of income per say.

To Read the full text of the Order CLICK HERE

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