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2016 (7) TMI 1647 - HC - Income TaxPenalty u/s 271(1)(c) - AO passed assessment order under Section 143 (3) determining the total income after rejecting the books of accounts and estimating the profit @ 6% and making addition under Section 40(a)(i) of the Act - Tribunal cancelling the penalty - HELD THAT:- This Court is of the opinion that the Tribunal in its order has held that the substantial additions on merits have been deleted in this order while considering the cross appeals on merits and therefore nothing survives in favour of the revenue for levy of the penalty. AO could have initiated the fresh penalty proceedings after receipt of the order of the Tribunal, but Assessing Officer did not do so. No review of the order is permitted under the I.T. Act by the Assessing Officer. The additions now made by the Assessing Officer in the order dated 6.01.2006 are not part of the show cause notice and no fresh notice is issued for initiating the penalty proceedings against the assessee. The result would be that the Assessing Officer dropped the proceedings for penalty on 30.03.2005 and thereafter, did not initiate the penalty proceedings. Commissioner of Income Tax (Appeals) was justified in deciding the issue in favour of the assessee and against the revenue department. We may also note that substantial additions on merits have been deleted in this order while considering the cross appeals on merits. Therefore, nothing survives in favour of the revenue for levy of the penalty. Considering the facts and circumstances, in the light of the findings of the Commissioner of Income Tax (Appeals), we are of the view , Learned Commissioner of Income Tax (Appeals) was justified in canceling the penalty under section 271(1)(c) - Decided in favour of assessee.
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