The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) upheld the imposition of penalty under section 271(1)(c ) of the Income Tax Act,1961 on the ground of furnishing the inaccurate particulars of income by the assessee.
Vimal Oil & Foods Ltd, the appellant assessee company had gone into liquidation and Mr. Manoj Khattar had been appointed as liquidator for liquidation of the corporate debtor i.e. the assessee.
The assessee appealed against the order passed by the order passed by the Commissioner of Income Tax (Appeals) for confirming the penalty imposed by the assessing officer under section 271(1)(c ) of the Income Tax Act.
During the hearing of the present appeal, none appeared on behalf of the assessee and Bholaram Devashi appeared for the revenue department.
The assessee submitted that the assessee‘s company had also not taken any specific term loan for payment of work in progress on plant and machinery. Hence, the assessee company had not allocated interest-bearing funds for work in progress on plant and machinery.
Further submitted that the penalty imposed under section 271(1)(c ) of the Income Tax Act was not as per the law and liable to be deleted.
The counsel for the revenue department contended that no presumption can be raised that the assessee utilized interest-free funds available with it for investment in work in progress on plant and machinery and the levy of penalty were as per the law and liable to be sustained.
The bench observed that the assessee had not been able to substantiate the business rationale of the traveling expense and the assessee only gave a general explanation, which was rejected by the assessing officer.
The two-member panel comprising Annapurna Gupta (Accountant) and Siddhartha Nautiyal (Judicial) held that the Commissioner of Income Tax (Appeals) decided the case on merit and as per the law. Thus the levy of penalty was liable to be sustained while dismissing the appeal filed by the assessee.
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