2015 (9) TMI 1286 - AT - Income Tax

Levy of penalty u/s.271(1)(c) - addition on account of adjustment u/s.145A with regard to difference in closing stock and unutilized MODVAT, disallowance of foreign travel expenses amounting to ₹ 1,35,750/- and disallowance to bonus payment to labourers - Held that - So far as the imposition of penalty for addition made on account of adjustment u/s.145A of the Act and foreign travel expenses are concerned, the Coordinate Bench of this Tribunal has deleted the penalty in assessee s own case for AY 2004-05. 2011 (12) TMI 517 - ITAT AHMEDABAD In respect of addition made on account of disallowance of bonus payment to labourers in quantum appeal, this Coordinate Bench for AY 2005-06 2012 (11) TMI 1077 - ITAT AHMEDABAD had restored this issue back to the file of AO for de novo assessment. Under these facts, the penalty levied on this amount does not survive. - Decided in favour of assessee.

Summary

Issues:
1. Confirmation of penalty under section 271(1)(c) of the Income Tax Act, 1961 by the Ld. Commissioner of Income Tax (Appeals).
2. Justification of penalty imposition and confirmation by the authorities regarding adjustments under section 145A, disallowance of foreign travel expenses, and bonus payment to laborers.
3. Comparison with a similar case in AY 2004-05 where the penalty was deleted by the Tribunal.
4. Analysis of penalty imposition on disallowance of foreign travel expenses and bonus payment to laborers.
5. Final decision and direction to delete the penalty on certain additions.

Analysis:
The appeal before the Appellate Tribunal ITAT Ahmedabad concerned the confirmation of a penalty of &8377; 2,29,891 under section 271(1)(c) of the Income Tax Act, 1961 for Assessment Year 2005-06. The Assessing Officer had made additions related to adjustment under section 145A, disallowance of foreign travel expenses, and bonus payment to laborers, leading to the penalty imposition. The Assessee argued that in a previous year, the Tribunal had deleted penalties on similar additions, questioning the justification of the penalty in the present case. The authorities had confirmed the penalties, citing reasons for each addition.

In the case of adjustment under section 145A and disallowance of foreign travel expenses, the Coordinate Bench of the Tribunal had previously deleted penalties in the Assessee's favor for AY 2004-05. The Tribunal referred to relevant case laws and the decision of the Hon'ble Apex Court to support the deletion of penalties. It was concluded that no concealment or inaccurate particulars were furnished by the Assessee, leading to the deletion of penalties on these additions.

Regarding the disallowance of foreign travel expenses and bonus payment to laborers, the Tribunal found that the Assessee had disclosed all expenditure details explicitly and provided explanations. The disallowance was based on insufficient evidence rather than concealment or inaccurate particulars. Relying on the decision of the Hon'ble Apex Court, the Tribunal deemed the penalties unsustainable and thus deleted them.

The Tribunal directed the Assessing Officer to delete the penalties on adjustments under section 145A and disallowance of foreign travel expenses. Additionally, the penalty on the bonus payment to laborers was not upheld due to the issue being restored back for reassessment. Ultimately, the Assessee's appeal was allowed, and the penalties were deleted based on the analysis and consistent view taken by the Tribunal.