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2019 (7) TMI 369 - AT - Income TaxRectification u/s 254 - penalty u/s 271(1)(c) - assessee offer explanation in penalty proceedings - HELD THAT:- CIT(A) upheld the assessment order passed by AO confirming additions wherein expenses claimed by assessee were not allowed against the said income. It is well settled now that penalty proceedings u/s 271(1)(c) are independent proceedings than the quantum assessment proceedings and merely because additions in quantum are sustained by appellate authorities, leviability of penalty u/s 271(1)(c) is not automatic. The tribunal while setting aside back to the file of the AO for fresh adjudication has directed AO to re-adjudicate the leviability of penalty u/s. 271(1)(c) on merits of the penalty provisions as are contained u/s. 271(1)(c) . Provisions of Section 271(1)(c) are to be read with Explanations . If the assessee comes with an explanation in penalty proceedings u/s 271(1)(c) , which explanations are genuine and bonafide as provided under Explanation1 to Section 271(1)(c) the assessee will be out of clutches of penalty provisions as are contained in Section 271(1)(c). The explanations which are offered before the tribunal by assessee as detailed in order dated 09.04.2018 needed verification by the AO as it is a factual matter and thus, tribunal was pleased to set aside the matter to the file of AO for re-adjudication on merits in accordance with law. Thus, when tribunal directed AO to decide the matter on merits in accordance with law , it meant merits under the provisions of Section 271(1)(c) - No merit in MA filed by Revenue which stand dismissed.
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