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DCIT, Circle 8 (1) , New Delhi Versus M/s. Sir Shadi Lal Enterprise (P) Ltd. and Vica-Versa

2016 (4) TMI 1008 - ITAT DELHI

Penalty u/s 271(1)(c) - addition made on account of writing off unused hologram - Held that:- We note that the ld. AR's main argument against non-leviability of penalty u/s 27l (l)(c) on this addition is that as per UP Excise Rules, the holograms printed and issued for a particular year can only be consumed during the year and the Distilleries have to destroy the same after the end of the year as per rules and guidelines framed by Excise Department; and the unused hologram is of no use for busin .....

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e, hence, the assessee was of bonafide belief that writing off of unused hologram is legal since it cannot be used next year and we concur with the said view of the ld. CIT (A) and also of the view that the claim of the assessee is not bogus. Accordingly, we uphold the order of the CIT (A) deleting the penalty on this addition also. So, we uphold the order of the CIT (A) deleting the penalty levied u/s 271(1)(c) of the Act. - Decided in favour of assessee - ITA No.5148/Del./2013, CO No.46/Del/20 .....

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77; 11,64,041/- levied by AO under section 271(1)(c) of the Income-tax Act, 1961 (hereinafter the Act ). 3. Brief facts of the case are that the assessee is engaged in manufacturing and sale of sugar in its two units, namely, Upper Doab Sugar Mills & Unn Sugar Complex and Alcoholic Products in two units, namely, Shamli Distillery & Chemical Works & Pilkhani Distillery & Chemical Works and was following mercantile system of accounting and closed its accounts on 31st March, 2009 fo .....

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95,59,885/-, inter alia, by making the following additions / disallowances :- (i) Provision of interest on SDF Loan Rs.14,45,710/- (ii) Collection of Dharmada for charitable Purpose and interest accrued on Accumulated fund of Dharmada Rs.30,84,058/- (iii) Hologram written off ₹ 1,69,655/- However, the aforesaid assessed income of ₹ 95,59,885/- was set off from brought forward losses and the income was determined at NIL. 3.1 The AO issued notice u/s 274 r.w.s. 271 of the Act dated 14. .....

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essee went in appeal before the ld. CIT (A) who deleted the penalty by observing as under :- I have considered entire judicial pronouncements on this issue cited by Ld. AR and the Assessing Officer. After considering these judicial pronouncement, I am of the opinion that unless a case is made, that the Assessee has filed inaccurate particulars of income or concealed the particulars of income, Penalty u/s 271(1)(C) is not laviable. In order to satisfy either of these two criteria, the court has d .....

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ficer disallowed the interest payable to IFCI under Section 43B of the Act. The Ld. AR has argued that the Sugar Development fund was created by Government of India, Ministry of Consumer Affairs, Food & Public Distribution Department of Food and Public Distribution to provide Loan for modernization of sugar plant. During the appellate proceeding, on the nature of loan, Ld. AR has filed letter no. 4-1I2005- SDF, Government of India, Dt. 1-07-2005, where it is mentioned that loan has been sanc .....

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ly disbursing agency the assessee was under reasonable belief before the order of ITAT that section 43B is not applicable as the loan is sanctioned by the Government of India. Therefore, his argument that there was prima facie two opinion at the time of filing return of income and it is not a case of ex-facie bogus claim of deduction appears to be convincing. In view of the above and considering entire facts and circumstances of the case, I am of the view that penalty u/s 271(1)(c) is not leviab .....

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e order of ITAT on this issue and under Rule 16 of I. T.Rule, 1962 read with See 158 A( 1) of the Act, the appellant has filed form no.8 for other years and the Assessing Officer has accepted the same vide order dated 14.12.2011 for A.Y 2003-04, CIT(A) has given the relief to the assessee which was reversed by hon'ble ITAT vide order dt. 4.6.2010. Therefore, on the date of filing of Return of income, there was two opinions available on the tax ability of Dharamda collection. I, therefore, am .....

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by Excise Department. The unused hologram is of no use for business purpose, therefore, its market value is nil. Therefore, the assessee has written off unused hologram at the end of the year consistently. During the instant assessment year, the assessing officer has made addition, at first appellate stage, C1T(A) gave relief to the assessee. However, hon'ble IT A T held that unless the hologram is destroyed, the same cannot be written off. Therefore, at the time of filing Income Tax return, .....

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revenue relied on the order of the AO and submitted that the law is very clear that even if there is no concealment of income or furnishing of inaccurate particulars on the ground of disclosure, but it is a claim appears to be ex-facie bogus, it will still attract penalty provisions. He submitted that the AO has rightly levied the penalty which the ld. CIT (A) erred in deleting the same. Therefore, he wants us to set aside the order of the ld. CIT (A) and restore that of the AO. 7. Ld. AR for th .....

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tions / disallowances :- (i) Provision of interest on SDF Loan Rs.14,45,710/- (ii) Collection of Dharmada for charitable Purpose and interest accrued on Accumulated fund of Dharmada Rs.30,84,058/- (iii) Hologram written off ₹ 1,69,655/- We find that the ITAT in the assessee s own case for AY 2007-08 (supra) has deleted the penalty wherein also the penalty was levied against the additions of provision of interest on SDF loan and addition on account of Dharmada account. Therefore, the issue .....

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