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Issues involved: Appeal against cancellation of penalty u/s 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2003-04.
Summary: The appeal was filed by the Revenue against the cancellation of penalty amounting to Rs. 58,38,720/- levied by the Assessing Officer u/s 271(1)(c) of the Income Tax Act, 1961. The assessee, a Company engaged in manufacturing steel ingots, had declared NIL income for the year in question but showed a business loss of Rs. 5,29,14,911/-. The Assessing Officer made additions on account of unaccounted sales and disallowed power expenses. The Commissioner of Income Tax(Appeals) confirmed part of the additions and cancelled the penalty. The Revenue contended that the penalty was justified, while the assessee argued in favor of the Commissioner's decision. In the quantum appeal, the Commissioner directed the Assessing Officer to adopt the average G.P. rate for applying on unaccounted sales, resulting in confirmed additions. The penalty was levied on these additions, but the Commissioner cancelled it citing legal precedents. The Revenue argued that the penalty should be upheld, while the assessee supported the cancellation based on the judgment of the Hon'ble Gujarat High Court. After considering the arguments, the Tribunal found that the additions were made on an estimated basis and there was no concealment of income by the assessee. Relying on legal judgments, the Tribunal upheld the cancellation of the penalty by the Commissioner. The appeal filed by the Revenue was dismissed, affirming the decision of the Commissioner. The judgment was pronounced on 18.06.2010.
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