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2013 (2) TMI 241 - HC - Income TaxNotice of demand u/s 156 - rejecting an application for stay of demand pending disposal of the appeal - penalty u/s 271 (1)(c) - revised return filled by assessee - Held that:- As appear from the record before the Court that together with the return of income as originally filed, the Petitioner annexed a copy of Form-3C in which there was a disclosure of the amount of Rs.5.86 crores which was treated as a reimbursement in respect of marketing services alleged to have been availed of from Deloitte. The transfer pricing analysis which was filed during the course of assessment proceedings similarly indicated the basis on which the deduction was claimed. When a revised return of income was filed, a disclosure was made to the effect that the return was revised with a view to add back the marketing expenses in the original return filed on 1 November 2004 with a view to avoid litigation in relation to the admissibility of the claim. The deduction under section 10A was stated to have been revised accordingly. That claim has been rejected by the assessing officer and in appeal as well as by the Tribunal. At the present stage, it is necessary for the Court to take note of the provisions of Section 220(6) under which the assessing officer is vested with the discretion, where an assessee has presented an appeal under section 246 or Section 246A and subject to such conditions as he may think fit to impose in the circumstances of the case to treat the assessee as not being default in respect of the amount in dispute in the appeal. When the statute confers a discretion on the assessing officer, that is a discretion which is wielded in the exercise of a quasi-judicial function. As in the present case, both the AO as well as the CIT have failed to exercise their jurisdiction in accordance with law. The CIT adverted to the fact that the quantum appeal had been rejected by the CIT (A) and the ITAT. That in itself would not amount to a valid justification for imposition of a penalty. Before a penalty is imposed, the requirements of Section 271 must be established. Accordingly, it would have been open to the Court to set aside the impugned order in its entirety and to remand the proceedings back to the assessing officer for fresh consideration. However, since arguments before the Court have been addressed on the prima facie merits of the case as well, no need to follow that course of action since that would lead to another round of proceedings before this Court again. Having regard to the circumstances which have been noted an appropriate order for partial deposit of the penalty would be necessitated. An order for the deposit of the entire penalty is clearly not justified - dispose of the petition by directing Petitioner shall deposit an amount of Rs. Fifty lakhs in two equal installments on or before 28 February 2013 and 31 March 2013.
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