TMI Blog2020 (9) TMI 327X X X X Extracts X X X X X X X X Extracts X X X X ..... ment by the CTO or even any implication that challan submitted by assessee may be false or bogus or fake .Assessee had agreed for the disallowance. During the penalty proceedings, assessee had given its explanation which has been accepted by the AO. Since AO has accepted the contentions of the assessee which have not been proved to be incorrect, the said dropping of penalty proceedings by the AO cannot be said to be erroneous. Where the assessee s explanation has been found to be satisfactory by the AO, and there is no adverse finding by the concerned authorities, then the view taken by the AO is one of the possible views and cannot be said to be erroneous. Since the order of CIT does not satisfy the twin conditions of the order being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... office was making all efforts to verify the respective cases. Since assessee did not submit original challans, the AO came to the conclusion that payment of VAT and CST were not genuine. Accordingly, he disallowed the same and brought it to tax. He also initiated penalty proceedings u/s 271(1)(c) of the I.T.Act, 1961 in respect of such addition. Assessee submitted its explanation and after considering the same, AO dropped the penalty proceedings. Thereafter, the CIT assumed the powers u/s 263 of the Act and verified the assessment records and observed that the penalty proceedings u/s 271(1)(c) of the Act were dropped without properly verifying the explanation filed by assessee. Therefore, he held that such an action is erroneous and prejud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has provided evidence in support of VAT CST claim based on which the AO has dropped the penalty proceedings u/s 271(1)(C). 6. The Ld. Pr. CIT has erred in passing the revisionary order by taking a different stand on an issue from that of a stand taken by AO. 7. The Ld. Pr.CIT ought to have appreciated the fact that the AO has duly verified the said issues and he was satisfied with the explanations furnished by the assessee and it is not required mandatorily on his part to record his satisfaction. 8. The Ld.Pr. CIT ought to have well appreciated the question of law that even if the action of AO in dropping the penalty proceedings u/s 271(1)(c) is prejudicial to the interest of revenue, unless the action is found to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee had neither concealed income nor furnished inaccurate particulars of income. He submitted that the AO, having accepted the contentions of the assessee, has dropped the penalty proceedings and thus it cannot be said to be erroneous. He submitted that for initiating or sustaining the revision order passed u/s 263 of the Act both the conditions i.e. order being erroneous and also prejudicial to the interest of Revenue have to be satisfied. Therefore, he prayed that the order of CIT be set aside. 3.1. Ld.DR, on the other hand, supported the order of CIT u/s 263 of the Act and submitted that the AO has dropped the penalty proceedings without proper verification and it is in these circumstances that the Pr.CIT has held the assessment orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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