TMI Blog2019 (1) TMI 930X X X X Extracts X X X X X X X X Extracts X X X X ..... - Grounds raised by the assessee are allowed. - ITA No. 155/PUN/2016 - - - Dated:- 5-10-2018 - Shri D. Karunakara Rao, AM And Shri Vikas Awasthy, JM For the Assessee : Shri Sanket Joshi For the Revenue : Shri M. K. Verma ORDER PER D. KARUNAKARA RAO, AM: This is the appeal filed by assessee against the order of CIT(A)-1, Nashik, dated 02.11.2015 for the A.Y. 2001-02. 2. Grounds raised by the assessee are extracted here as under: 1] The learned CIT(A) erred in confirming the levy of penalty u/s.271(1)(c) in respect of the addition of ₹ 5,00,000/- made by the CIT(A) on an estimated basis by rejecting the book results. 1.1] The learned CIT(A) failed to appreciate that the said addition was made on an estimated basis and hence, there was no reason to levy penalty u/s.271(1)(c) in respect of the same. 1.2] Without prejudice to the above grounds, the assessee submits that the above addition of ₹ 5,00,000/- was made by the learned CIT(A) and not by the A.O. and hence, the penalty u/s.271(1)(c) should have been initiated and levied by the CIT(A) in view of the ratio laid down in the case of Manjunatha Cotton Ginning Factory [359 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arious additions on account of (a) difference in inventory and trading account figures; (b) undervaluation of closing stock; (c) excessive and unproved expenses (d) disallowance of interest; (e) disallowance of unexplained loan taken from the brother and (f) disallowance of unexplained loans taken from 10 persons. Eventually, the AO assessed the income of the assessee at ₹ 22,83,943/-. Penalty proceedings u/s.271(1)(c) of the Act are initiated and eventually, levied penalty of ₹ 5,96,882/-. 4. Now the assessee filed the appeal against the against the penalty levied by the AO and partly sustained by the CIT(A). We proceed to extract the finding given by the CIT(A) here as under : 5.30 In view of the above discussions, considering the facts of the case and the relevant judicial pronouncements, it is held that the penalty is to be levied on ₹ 8,41,982/- u/s.271(1)(c) of the I.T. Act, 1961 for furnishing of inaccurate particulars thereby leading to concealment of income. The AO is directed to modify the penalty order accordingly. 5. Before us, Ld. Counsel for the assessee drew our attention to the grounds, details of additions and the order of Tribunal in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inflated purchases and undervaluation of closing stock restricting the addition to ₹ 5 lakhs. 7.1 In the second appeal before the Tribunal in ITA No.710/PN/2013, dated 31-03-2016, the Tribunal deleted the interest disallowance amounting to ₹ 2,66,982/- u/s.36(1)(iii) and loan of ₹ 75,000/-. For the sake of completeness, the finding given by the Tribunal reads as under : 11. We do not find any merit in such view. The contention of the assessee that the shed was constructed with a view to expand existing business remains uncontroverted. Section 36(1)(iii) of the Act as relevant for assessment year 2001- 02 provides that the amount of interest paid in respect of capital borrowed for the purpose of business or profession. The interest paid for loan utilized whether in capital field or in revenue field is irrelevant consideration. However, a proviso to section 36(1)(iii) of the Act has been inserted by the Finance Act, 2003 w.e.f. 01.04.2004 whereby any amount of interest paid in respect of capital borrowed for acquisition of assets for expansion of existing business or profession upto the date on which such capital asset is first put to use shall not be allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of on-money, but the same had no relevance to the estimation made by the Assessing Officer. In such circumstances, where the addition has been sustained on a ground other than the ground on which the addition was made, then penalty proceedings under section 271(1)(c) of the Act initiated on original additions do not stand. The CIT(A) had the power to initiate penalty proceedings on the addition made by him in assessment year 2007-08, however, he failed to do so and under the circumstances, the assessee cannot be held to have furnished inaccurate particulars of income or concealed the income in respect of addition of ₹ 12 lakhs, which is ultimately sustained in the hands of assessee. Accordingly, we direct the Assessing Officer to delete the penalty levied under section 271(1)(c) of the Act on addition of ₹ 12 lakhs in assessment year 2007-08. Considering the above settled legal position on the issue of requirement of initiation of penalty as well as levy of penalty by the CIT(A) who makes the addition for the first time on new grounds, the penalty stands unsustainable on technical grounds. In any case, the addition of ₹ 5 lakhs constitutes adhoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng survey discrepancy in stock was found on physical verification. The assessee agreed for the addition. The Assessing Officer assessed the income by making addition on account of low GP and on account of certain purchases not accounted in stock register. The Assessing Officer also levied penalty u/s. 271(1)(c) of the Act on said addition. On appeal Commissioner of Income Tax (Appeals) cancelled the penalty. The Department carried the matter in second appeal before the Tribunal. The Tribunal upheld the order of Commissioner of Income Tax (Appeals) by observing as under : The case of the assessee is that it has agreed to the addition made only to buy peace with the Department and that too on a condition that penalty under section 271(l)(c) of the Act shall not be levied on the assessee. The penalty has also been levied for trading addition on account of low GP which is based on estimation only and hence not sustainable. We find that similar additions made in the other group cases of the assessee were deleted by the CIT(A) and the Revenue has not filed an appeal to the Tribunal. We find that the assessee has filed confirmation regarding the purchase of cloth from M/s Royal ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
