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M/s. United Ink and Varnish Co. Pvt. Ltd. Versus DCIT, Range-8 (3) , Mumbai

2016 (8) TMI 318 - ITAT MUMBAI

Penalty u/s 271(1)(c) - difference in purchases - Held that:- The fate of the quantum assessment proceedings is not before us but even in the penalty proceedings u/s 271(1)(c) of the Act, if the fact-situation establishes non-maintainability of a particular addition, then, to the extent of the levy of penalty, the same can be considered appropriately. In the present case, we find that the explanation of the assessee was very much before the lower authorities and, in fact, assessee had moved an a .....

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ed balance of purchases to the extent of ₹ 75,302/- would be exigible to penalty u/s 271(1)(c) of the Act. Thus, on this aspect the Assessing Officer is directed to rework the amount of penalty u/s 271(1)(c) of the Act. - Disallowances of balances written off - Held that:- Disallowances relates to amounts written-off by the assessee which are capital in nature. No doubt, the claim of such write-off is not tenable in the eyes of law but we find that the relevant discussion in the assess .....

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0(34) denied - Held that:- Every case of a wrong claim cannot invite penalty u/s 271(1)(c) of the Act, especially in the present case where there is no material to suggest any concealment or furnishing of inaccurate particulars of income. In fact, apart from the fact that the exemption has been denied, the discussion in the assessment order does not reveal that the assessee had filed any particulars of income which were found to be wrong or otherwise false. Therefore, following the ratio of the .....

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ected against the order of CIT(A)-18, Mumbai dated 04.12.2014, pertaining to the Assessment Year 2010-11, which in turn has arisen from the order passed by the Assessing Officer dated 27.09.2013 under section 271(1)(c) of the Income Tax Act, 1961 (in short the Act ). 2. In this appeal, assessee has raised the following Grounds of appeal: 1. The Learned Commissioner of Income Tax Appeals erred in facts and in law in confirming the penalty u/s 271(1)(c) of the Income Tax Act aggregating to ₹ .....

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ff to the extent of ₹ 25,40,362/- by stating that the appellant has failed to explain the false claim of balances written off when the appellant has sufficiently explained that the claim of balances written off is only a bona fide error and not a false claim. 4. The Learned Commissioner of Income Tax Appeals failed to appreciate that making of a claim/expenditure, even if it is ultimately found to be legally unacceptable, cannot tantamount to concealment or furnishing of inaccurate particu .....

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es and disallowance of balance written off to the extent of ₹ 25,40,362/-. 7. The Learned Commissioner of Income Tax Appeals erred in treating the addition of dividend income of ₹ 5,000/- as concealment of income and/or furnishing of inaccurate particulars. 3. Although assessee has raised multiple Grounds of appeal, but the solitary grievance of the assessee arises from the action of CIT(A) in sustaining penalty u/s 271(1)(c) of the Act imposed by the Assessing Officer of ₹ 21, .....

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he assessed loss is on account of disallowances made by the Assessing Officer on account of Sec. 14A, unproved purchases, balances written-off and dividend income. At the time of hearing, the learned representative for the assessee pointed out that so far as the quantum assessment proceedings are concerned, the same have become final as assessee did not prefer any appeal on account of incurrence of loss. Be that as it may, subsequently the Assessing Officer has treated the assessee guilty of con .....

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. This action of the Assessing Officer has been further affirmed by the CIT(A) and accordingly, assessee is in further appeal before us. 5. Before us, the learned representative for the assessee, at the outset, pointed out that the non-filing of appeal against the quantum assessment ought not to be considered as admission of any default u/s 271(1)(c) of the Act because the appeal was not filed primarily because assessee company was a loss-making concern and subsequently even the business has bee .....

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xceeding ₹ 5 lacs, assessee furnished the details in terms of which total purchases from two parties amounted to ₹ 5,61,36,202/-, detailed as - M/s. DSV Chemicals Pvt. Ltd. - ₹ 2,81,76,701/- and M/s. United Specialty Inks Pvt. Ltd. - ₹ 2,79,59,501/-. The Assessing Officer noticed that the total purchases debited in the Profit and Loss account worked out to ₹ 5,22,77,902/- and, therefore, he held that the difference in the purchases reported by the assessee in the Pr .....

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nto consideration and, therefore, the purchases detailed at ₹ 5,61,36,202/- was erroneous. The learned representative submitted that assessee had no time to explain the discrepancy during assessment proceedings as the assessment order was finalized immediately after submission of the details, but assessee had moved an application seeking rectification of the mistake vide application dt. 5.4.2013 before the Assessing Officer, a copy of which has been placed in the Paper Book at pg. 10. The .....

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out that the difference of ₹ 38,58,300/- was erroneous and that the only difference which remained was of an insignificant figure of ₹ 75,302/-. It was therefore contended that the penalty, if any, be retained with respect to the difference of ₹ 75,302/- only. 7. On the other hand, the ld. DR while defending the levy of penalty has not disputed the factual matrix brought out by the learned representative for the assessee. 8. In our considered opinion, the facts brought out by .....

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ate of the quantum assessment proceedings is not before us but even in the penalty proceedings u/s 271(1)(c) of the Act, if the fact-situation establishes non-maintainability of a particular addition, then, to the extent of the levy of penalty, the same can be considered appropriately. In the present case, we find that the explanation of the assessee was very much before the lower authorities and, in fact, assessee had moved an application seeking rectification of mistake u/s 154 of the Act and .....

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377; 75,302/- would be exigible to penalty u/s 271(1)(c) of the Act. Thus, on this aspect the Assessing Officer is directed to rework the amount of penalty u/s 271(1)(c) of the Act. 9. The next addition on which penalty has been levied is a sum of ₹ 25,40,362/- representing disallowances of balances written off. In this regard, the relevant discussion is contained in para 6 of the assessment order dated 15.3.2013 (supra). The learned representative explained that the details of sundry bala .....

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totalling error is rectified, the addition on this ground would remain at ₹ 13,87,996/- only. On the merits of the levy, the learned representative contended that it is a case where a claim made for write-off of certain balances, though capital in nature, has not been accepted in the assessment proceedings. According to the learned representative, non-acceptance of a claim by itself would not render it liable for penalty u/s 271(1)(c) of the Act and that it was an inadvertent mistake made .....

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of the Act is leviable. 11. We have carefully considered the rival submissions on this aspect and find that so far as the computational error is concerned, penalty u/s 271(1)(c) of the Act is not exigible. Insofar as the disallowance of ₹ 13,87,996/- is concerned, the same relates to amounts written-off by the assessee which are capital in nature. No doubt, the claim of such write-off is not tenable in the eyes of law but we find that the relevant discussion in the assessment order does no .....

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