$ 17 * IN HIGH COURT OF DELHI AT NEW DELHI + ITA 544/2015 PRO COMMISSIONER OF INCOME TAX-6 ..... Appellant Through: Mr Kamal Sawhney, Mr Ragvendra Singh and Mr Shikhar Garg versus NADISH REAL ESTATES PVT. LTD ..... Respondent Through: Ms Kavita Jha and Ms Roopali Gupta for respondent Mr Anuj Aggarwal for R-3&4 CORAM: HON'BLE MR. JUSTICE BADAR DURREZ AHMED HON'BLE MR. JUSTICE SANJEEV SACHDEVA ORDER % 24.09.2015 This appeal preferred by revenue against order dated 09.01.2015 passed by Income Tax Appellate Tribunal in ITA No. 4444/Del/2013 for assessment year 2006-07 pertains only to aspect of penalty under Section 271(1)(c) of Income- tax Act, 1961 to extent of Rs 13,08,890/-. In brief respondent / assessee had filed loss return of Rs 38,86,482/-. loss had occurred due to certain expenses which had been made by assessee which assessee had claimed as business expenditure. Assessing Officer disallowed entire expenditure on account of fact that assessee had not commenced its business. It was case of assessee that it had commenced its business as it has started negotiations for purchase of land. Be that as it may, insofar as quantum of appeal is concerned that has been decided against assessee and in favour of revenue. Therefore, finding of fact against assessee is that assessee had not commenced its business and expenditure claimed by it was not allowable. issue before Tribunal in said appeal was whether penalty which had been levied by Assessing Officer under Section 271(1)(c) of said Act was justified or not. Tribunal placed reliance on decision of Supreme Court in case of CIT v. Reliance Petroproducts Pvt. Ltd.: (2010) 322 ITR 158 (SC). Tribunal came to conclusion that claim made by assessee was on point of law which was ultimately not found to be correct. But according to Tribunal mere fact that claim was incorrect would not make assessee liable for penalty under Section 271(1)(c). As long as assessee s claim was bona-fide, liability of penalty would not arise. Tribunal examined nature of claim made by assessee in following manner:- In case of assessee, we find that returned income of assessee was loss of Rs 38,86,482/- and, after disallowance of expenses, income assessed is nil. Thus, there was no tax liability on assessee which may motivate it to make bogus claim of expenditure. Even otherwise, genuineness of expenses has not been doubted by Revenue. fact that assessee started negotiation for purchase of land is also not disputed. Considering totality of these facts, we find no material to hold that claim for deduction of expenses was mala-fide. Therefore, on these facts, in our opinion, decision of Hon ble jurisdictional High Court in case of Zoom Communication P. Ltd. (supra) would not be application, but decision of Hon ble Apex Court in case of Reliance Petroporducts Pvt. Ltd. (supra) would be applicable. Respectfully following same, we cancel penalty. We do not find any infirmity in manner in which Tribunal has examined issue and has ultimately cancelled penalty. decision of Supreme Court in Reliance Petroproducts Pvt. Ltd. (supra) was clearly applicable. No substantial question of law arises for our consideration. appeal is dismissed. BADAR DURREZ AHMED, J SANJEEV SACHDEVA, J SEPTEMBER 24, 2015 SU PRO COMMISSIONER OF INCOME TAX-6 v. NADISH REAL ESTATES PVT. LTD