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2014 (12) TMI 47 - AT - Income TaxValidity of assessment of penalty proceedings - Additional ground adjudicated or not - whether during the subsistence of the assessment order, it is open to the assessee to challenge the validity of assessment in the penalty proceedings – Held that:- The penalty is assailed by the assessee on the ground that assessment order passed in the case of assessee was time barred and, therefore, was void-ab-initio and for that reason penalty cannot be levied - assessee has not challenged the assessment order by way of filing any appeal against that order – relying upon S.S.Ratanchand Bholenath vs. CIT [1994 (4) TMI 65 - MADHYA PRADESH High Court ] - parties cannot seek to re-open an assessment order which has become final in the penalty proceedings – thus, assessment order having not been challenged in an appeal or in other proceedings, it cannot be said to be a void order in a collateral proceedings – Decided against assessee. Effect of Explanation 7 to section 271(1) – Held that:- The explanation raises presumption that in a case where addition has been made as per TP provisions then the same will be deemed to represent the income in respect of which particulars have been concealed or inaccurate particulars have been furnished, unless the assessee proves to the satisfaction of the AO that the price charged or paid in such transaction was computed in accordance with the provisions contained in section 92C of the Act and in the manner prescribed under that section, in good faith and with due diligence - Thus, the exception to the deemed concealment is the satisfaction of AO regarding international transaction that the same is computed in accordance with the TP provisions in good faith with due diligence - it cannot be said that the computation made by the assessee was not in good faith and not with due diligence - on the date of filing the return for the year under consideration the assessee was having benefit of orders passed by TPO in respect of AYs 2002-03, 2003-04 and 2004-05 - Thus, it cannot be said that the assessee’s action was not in good faith or it was not with due diligence - even applying the provisions of Explanation-7 to section 271(1)(c) of the Act, it cannot be said that levy of concealment penalty warranted – thus, the order of the CIT(A) for deleting the penalty is upheld – Decided against revenue.
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