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Devyani | Nov 26, 2021 | Views 665237

AO has dropped the penalty in A.Y 2010-11, therefore, the penalty in this year also cannot be sustained

AO has dropped the penalty in A.Y 2010-11, therefore, the penalty in this year also cannot be sustained

M/s Action Construction Equipment Ltd. & Co. vs. DCIT, Central Circle-1, Faridabad; ITA No. 641/Del/2018; 25.10.2021

Issue:

The present Appeal has been filed against imposition of penalty under section 271 (1)(c) for Rs.5,42,648/- is without any basis, totally wrong, unjustified, illegal and unwarranted. The appellant is not liable to penalty u/s 271(1) (c) on the following grounds:

  • That addition was made on the basis of certain expenditure written in a note pad which does not belong to the appellant. There was no material available to assume that expenditure was incurred by the appellant and no penalty can be imposed on ad hoc additions.
  • The Ld A.O has imposed penalty without specifying in the show cause notice dated 18.03.2015 that penalty is imposed for concealment of Income or for furnishing inaccurate particulars.
  • The basis taken and method adopted by the assessing officer for imposing penalty u/s 271 (1)(c) for Rs. 5,42,648/- and confirmed by CIT(A)-3 is totally wrong, unjustified and unwarranted and the same deserves to be deleted in full”.

Facts:

  • The assessment u/s 153A(1) of the Income Tax Act was completed on 26.12.2011 at assessed income of Rs.32,88,91,470/- by the ACIT Central Circle-I, Faridabad.
  • The Assessing Officer (“AO”) noted that the issue related to deduction 80IC of the Act was set-aside back to the file of the Assessing Officer. It was further observed by the AO that, in respect of addition of Rs.15,96,494/- made during the course of assessment on account of unaccounted receipt/expenditure as noted in Saraswati note pad which was found and seized from the premises of the assessee company, the assessee did not file any appeal.
  • The Assessing Officer initiated penalty proceedings on this addition and subsequently by the impugned order dated 29.09.2015 imposed penalty u/s 271(1)(c) of the Act of Rs.5,42,648/-.
  • Aggrieved against this, the assessee preferred appeal before the ld. CIT(A), who sustained the penalty and now the assessee is in appeal before the Tribunal.

Observations:

  • The Revenue has not controverted the fact that the facts are identical as were in the Assessment Year 2010-11 and the penalty proceeding pertaining of this year was dropped.
  • The assessee has placed on record the order of the Assessing Officer pertaining to the Assessment Year 2010-11 dated 29.09.2015, wherein, the Assessing Officer had himself dropped the penalty proceedings.
  • However, in the Assessment Year under appeal, the Assessing Officer imposed penalty on the ground that Additions were made on the basis of all material and facts found during the course of search operation and also failed the assessee to justify during the course of search operation and also failed the assessee to justify during the assessment proceedings. Further, Non filing of appeal against the said addition is also strengthening the view taken by the department and acceptance of furnishing/concealing income to the tune of Rs.15,96,494/- by the assessee.
  • The aforesaid observation of the AO goes to demonstrate that the Assessing Officer had not specified the charge, whether it was far furnishing of inaccurate particulars of income or concealment of income.

Held:

  • Therefore, looking into the facts where the Assessing Officer under the same set of facts has dropped the penalty in Assessment Year 2010-11, therefore, the penalty in this year also cannot be sustained

To Read Judgment Download PDF Given Below :

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