TMI Blog2019 (7) TMI 983X X X X Extracts X X X X X X X X Extracts X X X X ..... law in conformity with the principles of natural justice. Thus, ground No.2 raised in appeal by the Revenue is allowed for statistical purposes. Penalty for disallowance on account of excess claim of VRS expenses disregarding the provisions of section 35DDA - HELD THAT:- Since this issue has been remitted back to the file of AO, similarly the issue of penalty is also remitted back to his file in the interest of justice and he shall adjudicate the issue as per law after complying with the principles of natural justice. Thus, ground No.3 raised in appeal by the Revenue is allowed for statistical purposes. Penalty for disallowance on account of inventory written off - HELD THAT:- As decided in own case [ 2013 (2) TMI 883 - BOMBAY HIGH COURT] Since in quantum appeal, the addition has been deleted, there is no justification in sustaining the penalty. We further find in the case of CIT Vs. cosmopolitan Trading Corporation [ 2003 (7) TMI 14 - RAJASTHAN HIGH COURT] and CIT Vs. Prakash Industries Ltd [ 2009 (10) TMI 291 - PUNJAB AND HARYANA HIGH COURT] has held that when the entire additions had been deleted in the quantum appeal, no reason survives for sustaining the pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 - - - Dated:- 17-7-2019 - Shri R.S.SYAL, VP And Shri Partha Sarathi Chaudhury, JM For the Assessee : Shri R Murlidhar And Shri Prashant Gandhi For the Revenue : Ms. Kesang Y Sherpa ORDER PER PARTHA SARATHI CHAUDHURY, JM : This appeal preferred by the Revenue emanates from the order of the Ld. CIT(Appeal)-1, Nashik dated 21.01.2015 for the assessment year 2002-03 as per the grounds of appeal on record. 2. The crux of the grievance of the Revenue in appeal is with regard to deletion of penalty levied u/s.271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) by the First Appellate Authority. 3. Ground No.1 relates to the deletion of penalty on the issue of expenses incurred for increase in share capital after amalgamation process, not covered u/s.35DD of the Act. 4. On this issue, in the quantum appeal for assessment year 2002-03 in assessee s own case in ITA No.1311/PUN/2011, the Ld. CIT(Appeals) decided the matter based on the decision in assessee s own case for assessment year 2004-05 and 2005-06 wherei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter, we set aside the order of the Ld. CIT(Appeals) on this issue and direct the Assessing Officer to delete the addition from the hands of the assessee. Thus, ground No.4 raised in appeal by the assessee is allowed and ground No.3 of the Revenue s appeal is dismissed. In view of the above, we observe since the quantum has been deleted, there is no justification in sustaining the penalty. Further, we find the Hon'ble Rajasthan High Court in the case of CIT Vs. cosmopolitan Trading Corporation reported in 274 ITR 640 and Hon ble Punjab Haryana High Court in the case of CIT Vs. Prakash Industries Ltd reported in 322 ITR 622 has held that when the entire additions had been deleted in the quantum appeal, no reason survives for sustaining the penalty. Thus, we sustain the deletion of penalty from the hands of assessee on this issue, Thus, ground No.1 of Revenue s appeal is dismissed. 6. Ground No.2 relates to the deletion of penalty on the issue of disallowance of warranty provision. On this issue, in quantum appeal of the assessee in ITA No.1311/PUN/2011 (Supra.) for assessment year 2002-03, the Co-ordinate Bench of the Tribunal has held as f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s ₹ 3,11,63,197/-. In view of the fact that actual expenditure incurred by the assessee in CP division is more than the amount of provision, we hold that deduction should be allowed for the amount of provision created. In the absence of such a position, we would have directed to follow the same rule of allowing provision at the rate of 0.40% of the sales of CP division. Once deduction is allowed on creation of provision, there can be no question of allowing deduction for actual expenses incurred in this division. The AO is directed to give effect to our above directions/observations after allowing opportunity of hearing to the assessee. Thus, ground No.2 of the assessee s appeal is allowed for statistical purposes. In view of the above, it is seen that this issue had been allowed for statistical purposes and the issue has been remitted back to the file of Assessing Officer. The issue of penalty is also therefore remitted back to the file of Assessing Officer in the interest of justice. The Assessing Officer shall adjudicate the issue as per law in conformity with the principles of natural justice. Thus, ground No.2 raised in appeal by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment. Thus, ground No.3 raised in appeal by the assessee is allowed for statistical purposes. In view of above, since this issue has been remitted back to the file of Assessing Officer, similarly the issue of penalty is also remitted back to his file in the interest of justice and he shall adjudicate the issue as per law after complying with the principles of natural justice. Thus, ground No.3 raised in appeal by the Revenue is allowed for statistical purposes. 8. Ground No.4 relates to the deletion of penalty on the issue of disallowance on account of inventory written off. 9. That on the issue, the Tribunal in assessee s own case (supra.) for assessment year 2002-03 has taken following view in consonance with the decision of the Hon ble Jurisdictional High Court in Income Tax Appeal(LOD) No.1107 of 2012 dated 1st February, 2013 : 26. We have perused the case records and analyzed the facts and circumstances on this issue. We have also given thoughtful consideration to the judicial pronouncement placed before us in assessee s own case wherein it has been decided that such provision for stock obsolescence is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition has been deleted, there is no justification in sustaining the penalty. We further find the Hon'ble Rajasthan High Court in the case of CIT Vs. cosmopolitan Trading Corporation reported in 274 ITR 640 and Hon ble Punjab Haryana High Court in the case of CIT Vs. Prakash Industries Ltd reported in 322 ITR 622 has held that when the entire additions had been deleted in the quantum appeal, no reason survives for sustaining the penalty. Thus, we sustain the deletion of penalty from the hands of assessee on this issue, Thus, ground No.4 of Revenue s appeal is dismissed. 10. Ground No.5 relates to the deletion of penalty on the issue of disallowance on account of sale of scrap. The observation of the Ld. CIT(Appeals) on this issue is that the assessee has not suppressed any facts or details at any stage at the time of filing return of income or during the assessment proceedings or before the First Appellate proceedings. In this backdrop in the quantum appeal in ITA No.1311/PUN/2011 (supra.) for assessment year 2002-03, the Tribunal has held as follows: 31. We have perused the case records and analyzed the facts and circumstances on this issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e do not find any infirmity with the findings of the Ld. CIT(Appeals) on this issue and relief provided to the assessee is hereby sustained. Thus, ground No.6 raised in appeal by the Revenue is dismissed. 13. Ground No.7 relates to the deletion of penalty on the issue of disallowance on account of advance to custom account and bad debts written off. 14. That on perusal of the records, we observe that with regard to the advance to custom account in assessee s own case for assessment year 2002-03 (supra.), the Tribunal has taken a view to provide an opportunity to the assessee to explain before the Assessing Officer the modus of working of such provision in its books of account and to justify with supporting evidences that why this amount should be allowed as deduction and the matter has been restored to the file of Assessing Officer for proper adjudication as per law. 15. With regard to the issue of bad debts , the Tribunal has dismissed this ground of the assessee on merits. However, we observe that proceedings on penalty stand on two parameters i.e. concealment of income or furnishing of inaccurate particulars of income . In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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