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2016 (4) TMI 1008 - AT - Income TaxPenalty u/s 271(1)(c) - addition made on account of writing off unused hologram - Held that:- We note that the ld. AR's main argument against non-leviability of penalty u/s 27l (l)(c) on this addition is that as per UP Excise Rules, the holograms printed and issued for a particular year can only be consumed during the year and the Distilleries have to destroy the same after the end of the year as per rules and guidelines framed by Excise Department; and the unused hologram is of no use for business purpose, therefore, its market value is nil. Therefore, the assessee has written off unused hologram at the end of the year consistently. We find that during the instant assessment year, the AO has made addition and, at first appellate stage, the CIT(A) gave relief to the assessee. However, ITAT held that unless the hologram is destroyed, the same cannot be written off. We find that the ld. CIT (A) observed that at the time of filing Income Tax return, the decision of ITAT order was not there, hence, the assessee was of bonafide belief that writing off of unused hologram is legal since it cannot be used next year and we concur with the said view of the ld. CIT (A) and also of the view that the claim of the assessee is not bogus. Accordingly, we uphold the order of the CIT (A) deleting the penalty on this addition also. So, we uphold the order of the CIT (A) deleting the penalty levied u/s 271(1)(c) of the Act. - Decided in favour of assessee
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