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TMI Blog2017 (2) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessee filed its return of income on 25.10.2007 declaring nil income. The assessee was declared as sick industrial undertaking on 23.09.2005 and a scheme of rehabilitation was approved on 17.8.2007 by BIFR. Pursuant to the said scheme the old directors resigned and new were inducted on the Board of the assessee. The records of the assessee were with the old management who was not cooperating with the new management of the assessee and as a result the books of accounts and records could not be produced before the AO in the assessment proceedings .The AO during the assessment proceedings on the basis of information available in the annual audited accounts of the assessee came to the conclusion that the assessee discontinued its manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid show cause notice and finally the AO proceeded to impose penalty on the basis of material available on record after giving detailed observations on page 2 and 3 of the penalty order passed under section 271(1)(c) of the Act of Rs. 1,92,07,921/- being 100% of the tax sought to be evaded by assuming that the assessee has nothing to say or submit in the matter. 4. The aggrieved assessee carried the matter before the ld.CIT(A) who deleted the penalty after taking into account the contentions of the assessee by observing and holding as under : 3.2. The facts of the case, the stand taken by the A.O. in the assessment order and the contentions raised by the learned authorized representative of the appellant company during the appellate procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation for imposing or confirming the concealment penalty. Clearly disallowances made are of debatable nature and therefore the said disallowances do not justify the levy of concealment penalty. As observed merely on account of making a debatable claim does not automatically result in levy of concealment penalty. The decision of the Hon'ble Supreme Court in the case of Reliance Petroproducts Pvt. Ltd. Vs CIT (322 ITR 158) is applicable to the facts of the case of the appellant. The gist of the decision is as under: "A glance at the provisions of section 271 (l)(c) of the Income-tax Act, 1961, suggests that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the penalty levied u/s. 271 (1)( c) of the Act is hereby deleted. 4. In the result, the appeal is allowed." 5. The ld. DR while relying heavily on the order of AO submitted that the AO has rightly imposed penalty for concealment of income and furnishing inaccurate particulars of income as the assessment order as framed u/s 143(3) of the Act stands confirmed by FAA. The ld DR submitted that the ld.CIT(A) has deleted the penalty imposed without taking into consideration the facts of the case by simply following the decision of the Hon'ble Apex Court rendered in the case of Reliance Petro products Pvt. Ltd. (supra). The ld DR also argued that the filing inaccurate particulars was proved beyond doubt when the FAA sustained the order of as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re stated to be in the possession and control of old management who was not cooperating in handing over the records of the company to the new management. Ultimately the AO has to complete the assessment on the basis information available on the records. The AO noted that that the assessee discontinued its business in 2004 whereas the assessee has claimed before the AO that the business was suspended and not discontinued. In consequence, in the assessment so framed all the expenses claimed in the profit and loss account of the assessee were disallowed and the interest income was treated as income from other sources instead of Business income. The quantum appeal by the assessee before the FAA was dismissed and thereafter no further appeal was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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