2018 (11) TMI 1431 - AT - Income Tax

Penalty u/s.271(1)(c) - additional sugarcane price paid over and above the purchase price fixed by the Government - appropriation of profit which is liable to be disallowed as business expenditure - Held that - In absence of any contrary material, we do not find any infirmity in the order of Commissioner of Income Tax (Appeals) in deleting levy of penalty by following the order of Tribunal in assessee s own case for earlier assessment year. Accordingly, the impugned order is upheld and appeal of the Revenue for assessment year 2010-11 is dismissed. Also the manner in which penalty proceedings u/s.271(1)(c) have been initiated, are ambiguous. In assessment order dated 25.03.2013 while initiating penalty proceedings, the Assessing Officer has recorded satisfaction u/s.271(1)(c) without specifying charge for levy of penalty. However, while levying penalty, the Assessing Officer concluded that the assessee furnished inaccurate particulars of income, therefore, provisions of section 271(1)(c) are attracted. The manner in which satisfaction for initiating penalty u/s.271(1)(c) has been recorded suffers from ambiguity and vagueness. Therefore, penalty levied u/s.271(1) (c) of the Act is liable to be deleted on this account as well. - Decided in favour of assessee. Allowance of claim of expenditure pertaining to preceding assessment year - Held that - CIT (Appeals) granted relief to the assessee by following the order of Tribunal in assessee s own case in assessment year 2010-11 as followed the decision of Exxon Mobil Lubricants (P) Ltd. 2010 (9) TMI 36 - DELHI HIGH COURT . DR has neither brought to our notice any contrary decision nor the ld. DR has pointed any difference between the nature of transaction in the assessment year under appeal and the assessment year 2010-11 for which the Tribunal has granted relief to the assessee. We do not find any error in the order of First Appellate Authority in allowing the appeal of assessee - Decided against revenue

Summary

Issues Involved:
1. Appeal against deletion of penalty u/s.271(1)(c) for assessment year 2010-11.
2. Appeal against allowing claim of expenditure pertaining to earlier year for assessment year 2012-13.

Analysis:

Issue 1: Appeal against deletion of penalty u/s.271(1)(c) for assessment year 2010-11:
- The Department filed an appeal against the order of the Commissioner of Income Tax (Appeals) deleting the penalty levied u/s.271(1)(c) for the assessment year 2010-11.
- The Assessing Officer disallowed prior period expenditure related to additional sugarcane purchase price claimed by the assessee during the current assessment year.
- The Commissioner of Income Tax (Appeals) deleted the penalty based on the Tribunal's decision in the assessee's case for the previous assessment year.
- The Tribunal upheld the deletion of penalty, citing that the addition itself had been deleted, rendering the penalty baseless.
- The Tribunal also noted ambiguity in the initiation of penalty proceedings under section 271(1)(c) and directed the deletion of the penalty due to the vague recording of satisfaction by the Assessing Officer.

Issue 2: Appeal against allowing claim of expenditure pertaining to earlier year for assessment year 2012-13:
- The Department appealed the order of the Commissioner of Income Tax (Appeals) regarding the allowance of expenditure from a preceding assessment year for the assessment year 2012-13.
- The Assessing Officer disallowed the additional sugarcane price paid to farmers as expenditure pertaining to an earlier year.
- The Commissioner of Income Tax (Appeals) reversed the disallowance based on the Tribunal's decision in the assessee's case for the assessment year 2010-11.
- The Tribunal upheld the Commissioner's decision, finding no error in allowing the claim of expenditure following the precedent set in the previous assessment year.

In conclusion, both appeals by the Revenue were dismissed, with the Tribunal upholding the orders of the Commissioner of Income Tax (Appeals) in both cases. The judgments were based on the application of legal principles, precedents, and the specific facts of each assessment year.