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Grounds of appeal are that the Ld. CIT(A) has wrongly concluded that the appellate willfully and deliberately concealed its income.The conclusion is incorrect both on facts and in law and hence the penalty u/s 271(1)(c) needs to be deleted.

Shanti Prime Publication Pvt. Ltd.

Sec. 271(1) of Income Tax Act, 1961 – Penalty – Merely on the ground that assessee company was not carrying on any business activity during the year as well as in earlier years, therefore, expenses claimed by it cannot be allowed does not amount to furnishing of inaccurate income or concealment of income as envisaged in Section 271(1)(c).

Facts: Being aggrieved, assessee went on appal before Tribunal and raised the ground that CIT(A) has wrongly concluded that the assessee willfully and deliberately concealed its income. The conclusion is incorrect both on facts and in law and hence the penalty u/s 271(1)(c) needs to be deleted.”

Held, that assessee company had taken loan against property from M/s. Hero Fincorp Ltd. and paid interest thereon and capitalized the said expenditure upto the date of acquisition which amounted to Rs. 14,84,895/- but inadvertently in the return Rs. 85,05,595/- was claimed as interest. However, AO was not convinced with the explanation of assessee merely on the ground that the assessee company was not carrying on any business activity during the year as well as in earlier years, therefore, expenses claimed by it cannot be allowed. Therefore, AO disallowed the total expenses amounting to Rs. 86,94,165/- and added back to the income of the assessee. This does not amount to furnishing of inaccurate income or concealment of income as envisaged in Section 271(1)(c). The Assessee has explained before AO and the CIT(A), that the business activity of the assessee is investment in real estate business and the same constitutes the business activity. The AO as well as CIT(A) only proceeded on the basis that there was no income during the year therefore there is no business activity, but the same is fallacy and cannot be taken as the basis for imposing the penalty. Thus, provisions of Section 271(1)(c) are not applicable in the present case. Hence, the penalty order does not sustain. The appeal of the assessee is allowed–UMG PROPERTIES P. LTD. Vs. ASSTT. CIT [2020] 80 ITR (TRIB) 448 (ITAT-DELHI)