2011 (12) TMI 517 - AT - Income Tax

Summary

Issues involved: Appeal against order of Commissioner of Income Tax (Appeals) confirming penalty u/s 271(1)(c) of the Income Tax Act, 1961 for assessment year 2004-2005.

1. Imposition of penalty for addition u/s 145A of the Act:
The Assessing Officer (AO) made an addition due to under-valuation of closing stock as per section 145A. Penalty was imposed at 100% of tax evaded. The CIT(A) upheld the penalty. The Assessee argued consistent accounting method and no profit evasion. Case laws were cited. Tribunal noted no concealment or inaccurate particulars, following case laws and Supreme Court decision, deleted the penalty.

2. Imposition of penalty for disallowance of foreign travel expenses:
AO disallowed foreign travel expenses, which was confirmed by CIT(A) and ITAT. Penalty u/s 271(1)(c) was imposed. Assessee claimed expenses were genuine. Tribunal found all details disclosed, and relying on Supreme Court decision, deleted the penalty.

3. Imposition of penalty for unexplained sundry creditors:
Penalty was imposed on unexplained sundry creditors, upheld by CIT(A). Assessee couldn't establish genuineness due to age of creditors. Tribunal found no evidence of bogus creditors, not a fit case for penalty as details were consistently shown in accounts. Penalty deleted based on recent Supreme Court judgment.

In conclusion, the Tribunal allowed the Assessee's appeal, deleting the penalties imposed on all the issues mentioned above.