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2015 (12) TMI 613 - AT - Income TaxPenalty under section 271(1)(c) - undisclosed payments - Held that:- The assessee has made payment of ₹ 70,000/- to Shri Dinesh Jethwa, meaning thereby, this party is a genuine party, it has relation with the assessee, otherwise has no occasion to make a payment of ₹ 70,000/- also. The assessee failed to substantiate the remaining payment. Therefore, in our opinion, the assessee has an explanation, which cannot be proved as a false by the AO. It is a different matter that the assessee failed to substantiate its explanation. This aspect is to be appreciated in the light that the AO has disallowed sub-contract expenses of ₹ 3,41,38,500/-. The ld.CIT(A) has only upheld the disallowance of ₹ 87,35,038/- which has been further reduced to ₹ 86,643/- by the Tribunal. In view of the above facts, the assessee does not deserve to be visited with penalty on this issue. As far as second amount is concerned, the ld.AO has made an ad hoc disallowance at 10% of the total administrative expenses. He disallowed a sum of ₹ 73,31,295/-. Out of which, the disallowance upheld by the CIT(A) is ₹ 5,33,909/-. It is an estimated disallowance from a payment of ₹ 7.33 crores. This amount has been disallowed for the reason that complete bills and vouchers could not be produced by the assessee. In our opinion, genuineness of the assessee’s claim to the extent of 99% was not in doubt. Therefore, on this ad hoc disallowance, the assessee should not be visited with penalty – his explanation is, otherwise, not false. In view of the above discussion, we allow the appeal of the assessee and delete the penalty. - Decided in favour of assessee.
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