9911796707
TMI Blog2014 (2) TMI 1335X X X X Extracts X X X X X X X X Extracts X X X X ..... umstances of the case and in law, the learned CIT(Appeals) has failed to appreciate that show cause notice under section 271(1)(c) is a statutory condition precedent to the imposition of penalty and, therefore, the penalty proceedings are bad in law since notice under section 271(1)(c) has not been properly served on the appellant within the prescribed period and, therefore, the said notice is against the principle of natural justice and consequently invalid in law. 2. Without prejudice to the above, the learned CIT(Appeals) has erred in confirming the levy of penalty on additions made on account of disallowance of expenses of Rs. 9,83,145/-, non-deduction of TDS of professional fees Rs. 25,05,138/- and preliminary expenses of Rs. 8,905/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee's case the capital employed was Rs. 1,50,000/- only. Thus he restricted the claim of expenses at Rs. 3,750/- which is allowable for the period of 5 years. Thus excess claim of Rs. 8,950/- was disallowed. 4. In the first appeal, it appears that all these disallowances were not pressed before the Ld. CIT(A) by the assessee. 5. The AO after invoking the provisions of Explanation 1 to section 271(1)(c), levied the penalty on these disallowances. Even the Ld. CIT(A) too has confirmed the levy of penalty on the aforesaid disallowance, firstly on the ground that assessee has failed to discharge its onus during the course of assessment proceedings as well as during the course of penalty proceedings; secondly the assessee has failed to comply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnish the relevant details and, therefore, the penalty has rightly been confirmed. 8. We have heard the rival submissions of the parties and also carefully perused the materials placed on record. So far as levy of penalty on disallowance of Rs. 9,83,145/- is concerned, it is seen that the AO has made adhoc disallowance at the rate of 20% of the various expenses without pointing out any specific expenses being in the nature of non business purpose or for personal use. If the accounts have been audited, then the normal presumption is that the expenses are verifiable vis-a-vis the documents maintained by the assessee. Even though disallowances have been made in the quantum proceedings, due to non verifiability of expenses through corroborati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis of such payments the assessee has debited the said amount in the P&L account, it cannot be held that assessee is liable for penalty within the ambit of section 271(1)(c). Thus levy of penalty on the disallowances made by virture of section 40(a)(ia) cannot be sustained. Accordingly we hold that penalty levied on such disallowances should be deleted. 10. Lastly, with regard to disallowance of claim of deduction u/s 35D, it is seen that assessee has furnished the necessary information with regard to claim of such expenses, in the audited statement of account duly disclosed in the return. Even if the entire claim of the assessee has not been found to be sustainable, then also it cannot be held that assessee has furnished inaccurate parti ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
