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TMI Blog2015 (10) TMI 2239X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount of expenditure incurred on payment made to employees under Voluntary Separation Scheme (hereinafter referred to as 'VSS'). The appeal No. 6083/Del./2013 has been preferred by the Revenue against the order dated 30.08.2013 passed by ld. CIT(A)-XV, New Delhi, challenging the deletion of penalty of Rs. 32,43,552/- levied u/s. 271(1)(c) of the IT Act for the assessment year 2004-05. 2. The brief facts of the case are the assessee is a Government of India Undertaking company established for the business of manufacturing fertilizers. The operation of the company was shut down following a decision by the Govt. of India in 2002.The assessee filed return of income for the relevant year on 20.10.2004 declaring total loss of Rs. 815,49,10,915/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the offer of Voluntary Separation shall be governed by their terms of appointment. The aggrieved assessee has challenged the impugned order by way of this appeal before us. 3. On the basis of this addition of Rs. 90,40,000/- made vide assessment order dated 27.11.2009, the Assessing Officer, initiated penalty proceedings u/s. 271(1)(c) of the Act, observing that the assessee has tried to suppress its taxable income by making wrong claim which was not allowable as per law and as such the assessee has furnished inaccurate particulars of its income. He, therefore, imposed a penalty of Rs. 32,43,552/- u/s. 271(1)(c) of the Act, representing 100% of the tax sought to be evaded by the assessee. The assessee preferred an appeal before the ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity and grant of retrenchment compensation under ID Act, 1947 to employees not availing of this offer within three months, after obtaining the required permission from the competent authority. In view of these submissions, the ld. AR contended that the addition of Rs. 90,40,000/- confirmed by the ld. CIT(A) is liable to be deleted. He also contended that the penalty imposed by the Assessing Officer u/s. 271(1)(c) has rightly been deleted by the ld. CIT(A). 5. The ld. DR, on the other hand, has relied upon the order of the lower authorities and submitted that the assessee has claimed an expenditure of Rs. 1.13 crores on account of payment to employees under VSS. This amount should have been deferred over the period of five years and 4/5th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome. 6. We have considered the rival submissions of both the parties and have gone through the material available on record. We find that the assessee company is a government company and the same was closed as per Government order referred to above. The company had issued Voluntary Separation Scheme for their employees, which was applicable to all the employees as on that date. In this scheme, the Company has claimed deduction of expenditure of Rs. 1.13 crores toward payment made to employees under this scheme. For the sake of convenience we reproduce section 35DDA hereunder : 35DDA. (1) Where an assessee incurs any expenditure in any previous year by way of payment of any sum to an employee in connection with his voluntary retirement, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. 7. Adverting to the departmental appeal challenging the penalty imposed u/s. 271(1)(c), we find that once the impugned addition on the basis of which the penalty was imposed by the Assessing Officer, stands deleted by us, there remains no justification to hold that the assessee had furnished inaccurate particulars of its income. Therefore, the very basis for imposition of penalty stands collapsed. We, therefore, find no reason to interfere with the order of the ld. CIT(A) in deleting the impugned penalty imposed u/s. 271(1)(c) of the Act. As a result, the appeal filed by the Revenue deserves to be dismissed. 8. In the result, the appeal of the assessee is allowed and that of the Revenue is dismissed. Order pronounced in the open cour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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