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Issues involved: Appeal against deletion of penalty u/s.271(1)(c) of IT Act by ld.CIT(A)-XV Ahmedabad.
Issue 1: Deletion of penalty u/s.271(1)(c) based on disallowance of TDS deduction The Revenue appealed against the deletion of penalty of &8377; 13,85,546/- u/s.271(1)(c) of IT Act by ld.CIT(A)-XV Ahmedabad. The AO had disallowed &8377; 40,87,727/- for non-deduction of TDS from freight payments to truck owners, leading to initiation of penalty proceedings. Ld.CIT(A) held that penalty imposition was not justified, citing that penalty and assessment proceedings are distinct, and not all disallowances attract penalty. The appellant's explanation was not properly considered by the AO, who failed to distinguish between 'furnishing of inaccurate particulars' and 'concealment of income'. The appellant's bonafide was supported by conflicting views on disallowance u/s.40(a)(ia) and relevant case laws. The ITAT Ahmedabad concurred with ld.CIT(A)'s decision, noting that the issue of disallowance u/s.40(a)(ia) was contentious and relying on legal precedent to dismiss the Revenue's appeal. Issue 2: Barred by limitation and erroneous quantification of penalty The appellant contended that the impugned penalty order was barred by limitation and the penalty amount was excessive, but failed to substantiate these grounds. The special bench order in the case of Marilyn Shipping & Transport, which supported the appellant's position, was not available to the AO at the time of passing the orders. These grounds were rejected, while other grounds of appeal were allowed. The ITAT Ahmedabad upheld ld.CIT(A)'s decision to delete the penalty, finding no fallacy in the view taken and dismissing the Revenue's appeal based on the legal proposition that mere disallowance of expenditure should not attract penalty.
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