TMI Blog2010 (7) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is able to bring his case within Explanation 1 to Section 271, then no penalty can be levied on him. - the explanation offered by the assessee is bona fide and the assessee’s case would fall within the ambit of Explanation 1 to Section 271 of Act, 1961. - 926/2010 - - - Dated:- 19-7-2010 - Represented:- Through: Ms. Suruchii Aggarwal, Advocate Through: None CORAM: HON'BLE THE CHIEF JUSTICE HON'BLE MR. JUSTICE MANMOHAN MANMOHAN, J (ORAL) 1. The present appeal has been filed under Section 260A of Income Tax Act, 1961 (for brevity "Act, 1961") challenging the order dated 30th November, 2009 passed by the Income Tax Appellate Tribunal (in short "ITAT") in ITA No. 3573/Del/2009, for the assessment yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o see as to whether the assessee has been able to discharge its burden that lay upon it under Explanation 1 to section 271(1)(c) of the Act, in the light of the facts and circumstances of the present case. 8. In this case, it is not in dispute that the sum of Rs. 40,00,000/- had given by the assessee to Shri Gautam Nemani, share broker, for purchase of shares in the month of July, 1997. It is also not in dispute that no shares were ever purchased out of the aforesaid amount. Mr. Gautam Nemani had not given the money back to the assessee company till February 2001, when only the sum of Rs. 10,00,000/- was given to the assessee leaving balance of Rs. 30,00,000/- receivable by the assessee from Mr. Guatam Nemani. The AO in his assessment or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Board of Directors of the company stating that in the very poor financial condition of Mr. Gautam Nemani, the balance amount of Rs. 30,00,000/- due from him be written off in that year. It is important to note that in the quantum appeal before the Tribunal, the Tribunal has accepted the assessee's contention that Board resolution dated 04.12.1987 permitted the assessee to pursue the object incidental to the main object of the company viz., the business of investment in shares and, a copy of which duly filed by the assessee before the AO. Thus, the observation of the CIT(A) in the quantum appeal to the contrary was held to be not correct by the Tribunal i.e. whether the assessee did filed the copy of Board resolution dated 04.12.1987 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ject of the company, that is, investment in shares. It is also apparent that the assessee Board had on 1st March, 2009 taken a decision, in view of the poor financial condition of the share broker, Mr. Gautam Nemani to write off the balance amount of Rs. 30,00,000/- due from him. 5. In our opinion, the decision in Dharamendra Textile Processors (supra) must be understood to mean that applicability of Section 271(1)(c) would depend upon the existence or otherwise on the conditions expressly stated in the said Section but once the said Section was applicable, the authority concerned would have no discretion in quantifying the penalty. Consequently, if the assessee is able to bring his case within Explanation 1 to Section 271, then no penal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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