Penalties levied on assessee, confirmed by CIT(A) were set aside by ITAT.

Facts in Brief:

1. CIT (A) upheld the penalties of Rs.98,000/- and Rs. 4,17,333/- (for AY 2009-10) levied on the assessee u/s 271(1)(c) of the Income Tax Act, 1961, on account of expenses incurred with regard to suspended business.

2. The assessee, during the year, claimed various expenses like power & fuel (Rs.61,782/-) repair to building (Rs.22,318/-), salary & wages (Rs.1,70,000), other insurance (Rs.62,702/-), service tax (Rs.28,327/-), etc., on account of business expenses, though no business of cold storage was carried out during the year, as well as during the preceding Assessment year: 2008-09 & 2009-10 year.

3. AO, opinioned that the assessee had adjusted his business loss against rental income with a view to reduce its tax liability.

4. The claim was disallowed. It was in pursuance of this, that the penalties were levied.

5. On appeal CIT(A) confirmed the same. On appeal ITAT held,

6. In "CIT vs. The Shahabad Co-op. Sugar Mills" (supra), has held that making of wrong claim is not at par with concealment or giving of inaccurate information, which may call for levy of penalty u/s 271(1)(c) of the Act and merely because the assessee claimed a deduction which has not been accepted by the Revenue, penalty u/s 271(1)(c) of the Act is not attracted.

7. My above observations are equally applicable, mutatis mutandis, for both the years under consideration.

8. For the above discussion, finding force in the grievance sought to be raised by the assessee, the same is accepted. The levy of penalties, as confirmed by the ld. CIT(A), are set aside and cancelled.

9. In the result, both the appeals of the assessee are allowed.