9911796707
|
Home
Issues involved: The judgment involves the levy of penalty u/s 271(1)(c) of the Income Tax Act without recording satisfaction, disallowance of sundry creditors, and non-consideration of assessee's explanation.
Levy of Penalty u/s 271(1)(c) without recording satisfaction: The appellant challenged the penalty imposed by the Assessing Officer (A.O.) and upheld by the Ld. CIT (A)- IV, Surat, contending that the penalty was levied without the A.O. recording his satisfaction. The A.O. initiated penalty proceedings by issuing a notice requiring the assessee to show cause as to why the penalty should not be levied. The penalty was imposed on the addition made by the A.O. The Ld. CIT (A) partially relieved the assessee, directing the penalty only on the sustained addition. The appellant argued that the penalty order was bad in law as the A.O. ignored the explanation provided by the assessee, violating principles of natural justice. The Tribunal, after considering the submissions, found that the penalty order was passed in violation of principles of natural justice and deleted the penalty, as the assessee had losses to be carried forward even after giving effect to the CIT (A)'s order. Disallowance of Sundry Creditors: The A.O. made an addition of Rs. 10,33,422 as cash credit u/s 68 of the Act due to the unverified increase in unsecured loans and sundry creditors. The assessee failed to provide confirmations from debtors and lenders due to records being destroyed in a flood. The Ld. CIT (A) and Hon'ble ITAT confirmed this addition. The A.O. also disallowed Rs. 13,67,524 on labor and diesel expenses, which was partially sustained by the Ld. CIT (A). The penalty was imposed based on these additions. The Tribunal found that the explanation tendered by the assessee was ignored before passing the penalty order, and considering the factual position of losses to be carried forward, the penalty was deleted. Non-consideration of Assessee's Explanation: The A.O. failed to consider the reply submitted by the assessee in response to the show cause notice before levying the penalty u/s 271(1)(c). The Ld. CIT (A) acknowledged the submission but the A.O. did not consider it. The Tribunal held that ignoring the explanation tendered by the assessee violated principles of natural justice, leading to the deletion of the penalty.
|
