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2015 (5) TMI 185 - ITAT MUMBAI

2015 (5) TMI 185 - ITAT MUMBAI - TMI - Penalty u/s 271(1)(c) - Disallowance on account of preliminary expenses written off and bad debts writing off - Bar of limitation - Held that:- Assessee filed an appeal before the Tribunal, therefore, as per our considered view the time limit for imposition of penalty is governed by the main provisions of Section 275(1)(a) and no by the proviso to section 275(1)(a). Since the penalty order was passed well within the period of six months from the end of the .....

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Since the department itself has accepted assessee’s claim for such writing off of preliminary expenses in the immediately preceding assessment year, disallowance of similar claim in subsequent year will not make it a fit case for levy of penalty. Accordingly, we do not find any justification for levy of penalty in respect of disallowance of preliminary expenses of ₹ 1,10,000/- written off during the year under consideration.

Since the advances were not recovered the same was wr .....

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disallowed in the course of regular assessment, will not entitle the AO to levy penalty for such disallowance. It was observed that law does not bar or prohibit an assessee for making a claim, which he believes may be accepted or is plausible. When such a claim is made during the course of regular or scrutiny assessment, penalty cannot be imposed as necessarily the claim was bound to be carefully scrutinized both on facts and in law. - Decided partly in favour of assessee. - ITA No.1521/Mum/2013 .....

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on account of preliminary expenses written off amounting to ₹ 1,10,000/- and on account of bad debts writing off amounting to ₹ 8 lakhs. As per the AO assessee has not filed accurate particulars, therefore, disallowance amounts to concealment of income. Accordingly, he levied penalty u/s.271(1)(c) and the same was confirmed by the CIT(A). Against which, the assessee is in further appeal before us. 3. During the course of hearing before us ld. AR raised additional grounds to the effe .....

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f Income Tax, whichever is latter. 4. As per ld. AR in this case, the AO has not passed order u/s.271(1)(c) within one year from the end of the financial year in which the order of CIT(A) was received by the Commissioner. Accordingly, the order passed beyond the limitation period, has no legs to stand. 5. On the other hand, ld. DR Mr. Asghar Zain contended that assessee s case is covered by the main provisions of Section 275(1)(a), insofar as assessee has filed an appeal before the Tribunal agai .....

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1)(a). Since the penalty order was passed well within the period of six months from the end of the month, order of ITAT was received by Chief Commissioner, we do not find any merit in the contention of ld. AR that order so passed was barred by limitation. Accordingly, the additional ground raised by the assessee is dismissed. 7. Now, coming to the merit of the penalty imposed u/s.271(1)(c), we found that assessee was proportionately claiming preliminary expenses every year. During the year under .....

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we do not find any justification for levy of penalty in respect of disallowance of preliminary expenses of ₹ 1,10,000/- written off during the year under consideration. 8. Now, coming to the disallowance on account of bad debts amounting to ₹ 8 lakhs, we found that advances were given by assessee company to its employees in earlier years in the course of its business. However, since the advances were not recovered the same was written off as employees have left the job, which is clea .....

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