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2016 (1) TMI 776 - ITAT AHMEDABAD

2016 (1) TMI 776 - ITAT AHMEDABAD - TMI - Penalty u/s. 271(1) (c) - Held that:- A case for levy of penalty for concealment of income has to be evaluated in terms of provisions of Explanation. 1 to Section. 271(1)(c), as per which if in relation to any addition in the assessment, the assessee offers no explanation or offers explanation which is found to be false or is not able to substitute the explanation and is also not able to prove that the explanation is bonafide, the addition made would amo .....

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ings or impose penalty. In the present case, we are of the view that in the absence of complete and convincing corroborative evidence, the Revenue may justify addition, but in the matter of penalty proceedings, the onus lies heavily on the Revenue to prove that the assessee had concealed its income or has filed inaccurate particulars of its income. In the present case no penalty is leviable u/s 271(1)(c) and therefore direct its deletion - Decided in favour of assessee. - ITA No: 2368/AHD/2011 - .....

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nufacturing and sale of steel bars. Assessee filed its return of income for A.Y. 2002-03 on 29.10.2002 declaring total loss of ₹ 3,32,64,310/-. The case was selected for scrutiny and thereafter the assessment was framed under section 143(3) vide order dated 28.02.2005 and the total loss was determined at ₹ 2,63,60,110/- interalia by making various disallowances including the disallowance of interest to ONGC of ₹ 67,73,007/-. On the addition on account of disallowance of interes .....

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24,17,963/-. Aggrieved by the penalty order of A.O., Assessee carried the matter before ld. CIT(A) who vide order dated 20.06.2011 dismissed the appeal of the Assessee. Aggrieved by the aforesaid order of ld. CIT(A), Assessee is now in appeal before us and has raised the following grounds:- 1 The learned C1T(A) has erred in confirming the penalty of ₹ 24,17,963 levied u/s. 27 (1 )(c) of the Act despite the fact that - (a)proper satisfaction to initiate penalty proceedings was not arrived a .....

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enalty proceedings since no opportunity of personal hearing was accorded to the appellant before passing of the impugned order levying penalty despite a specific request having been made in this regard. 4.The learned C1T(A) has erred in not appreciating the fact that - (a) the appellant had offered bona fide explanation; and (b) none of the details / information furnished were found to be incorrect / inaccurate with regard to the claim of deduction of interest payable to M/s. Oil and Natural Gas .....

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ght to be evaded as the expenditure was disallowed in the year under reference and allowed as a deductible expenditure in the immediately succeeding assessment year 2003-04. 5.2 The Id. CIT(A) has erred in not appreciating the fact that in the original return filed for AY 03-04 the appellant disallowed the same and the claim was revived when disallowed in AY 02-03. 4. Before us, at the outset, ld. A.R. submitted that though the Assessee has raised various grounds but the solitary issue for adjud .....

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allized during the year are not allowable and accordingly the claim of interest was disallowed by the A.O. On the aforesaid disallowance, A.O levied penalty u/s. 271(1)(c) of the Act and the penalty was also confirmed by ld. CIT(A). 6. Aggrieved by the aforesaid order of ld. CIT(A), Assessee is now in appeal before us. 7. Before us, ld. A.R. reiterated the submissions made before A.O and ld. CIT(A) and further submitted that Assessee has not filed any inaccurate particulars of income and that ev .....

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ssee and Assessee would not have gained anything by claiming loss in view of the fact that even after the disallowance, the Assessee had losses. He further submitted that full disclosure has been made by the Assessee and in such a situation it cannot be said that Assessee had concealed particulars in the return of income. He further placed reliance on the decision of Apex Court in the case of Reliance Petro Products Pvt. Ltd. (2010) 322 ITR 158. He therefore submitted that the penalty levied by .....

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here was no mala fide intention because there was huge loss and the disallowance was on account of difference of opinion on the question of year of allowability of claim. These submissions of Assessee have not been controverted by Revenue. 9. The necessary ingredients for attracting Explanation 1 to Section. 271(l)(c) are that: (i) the person fails to offer the explanation, or (ii) he offers the explanation which is found by the AO or the ld. CIT(A) or the ld. CIT to be false, or (iii) the perso .....

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oses of clause (c) of Section. 271(1), and the penalty follows. On the other hand, if the assessee is able to offer an explanation, which is not found by the authorities to be false, and assessee has been able to prove that such explanation is bona fide and that all the facts relating to the same have been disclosed by him, then in that case penalty shall not be imposed. 10. In the present case the assessee had disclosed the material facts before the AO. When the assessee has made a particular c .....

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