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2017 (4) TMI 664 - HC - Income TaxPenalty under Section 271(1)(c) - violation of proviso to Section 220(1) - precipitate discretion to shorten the normal period of demand was made - Held that:- In the present case it appears that the AO was authorized to file an appeal to the Income Tax Appellate Tribunal (ITAT) and did so against the findings of the CIT(A). Given the fact that the additions were made on account of a highly contentious and an entirely debatable issue, and the fact that the assessee had succeeded in past years – and at least in one year the penalty imposed was deleted, the exercise of discretion in this case under proviso to Section 220(1), in this Court’s opinion was unwarranted. Furthermore, if one keeps the logic in Sony India Ltd. (2005 (5) TMI 39 - DELHI High Court) in mind, the reasons to believe in exercise of discretion should be actuated by some external fact such as the assessee’s imminent threat of decamping from the jurisdiction or liquidating its assets. In fact the Division Bench in Sony India Ltd. (supra) even drew an analogy that the provisions of the Code of Civil Procedure, 1908 relating to attachment before judgment and like circumstances, impel a Court to exercise restraint before passing an attachment order. In the present case no such factor appears on the record. The Revenue seems to have been entirely motivated in ensuring that the refunds due to the petitioner / assessee are somehow not given effect to and that the demand is made so as to ensure that all other periods, available to the petitioner, are shortened. This is a plain case of abuse of power under Section 220(1) which no Court can countenance. - Decided in favour of assessee.
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