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TMI Blog2016 (7) TMI 757X X X X Extracts X X X X X X X X Extracts X X X X ..... cto’ as a natural consequence. In our country’s legal and constitutional frame work, the role assigned to the income tax department is to act like a ‘watch dog’ to ensure that tax evasion is checked and legitimate tax collection is augmented, but not to act like a ‘scare crow’. In the facts of the case before us nothing has been brought by the authorities to show that the claim of the assessee was bogus. Nothing has been shown to establish whether there was concealment of income or furnishing of inaccurate particulars of income and how. It has been merely mentioned by the AO in the last para of the penalty order that in case return of the assessee was not selected for scrutiny, then it would have resulted in excess carry forward of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmissions before us and the same has been considered while disposing this appeal. 3.1. Ld. Counsel of the assessee relied upon following judgments in support of his arguments that no penalty should be levied on this case. 1. Decision of Hon'ble Supreme Court in case of CIT v. Reliance Petroproducts Pvt. Ltd [322 ITR 158]. 2.Decision of Hon'ble Supreme Court in case of Price Waterhouse Coopers Pvt. Ltd v. CIT Ors [348 ITR 3061 3. Order of Hon'ble Mumbai Tribunal in case of B. Melaram Sons v. ACIT [ITA No.5143/Mum/2014] dated 25.02.2016 for A.Y. 2008-09. 4. Order of Hon'ble Mumbai Tribunal in case of ACIT v. Manga l ya Trading Inv e s tment s Ltd [ ITA No . 4165/Mum/2011] dated 20.04.2012. 5. Order of H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39; even though the ₹ 18,25,000/- was paid towards application money for acquisition of shares and the money lost was not related to any business activity. Under the circumstances, the levy of penalty at the minimum rate of 100% amounting to ₹ 6,14,2951- is found to be perfectly valid. 2. The appeal is dismissed. Sd/- Commissioner of Income Tax (Appeals)-6, Mumbai. 3.3. Before us, it was vehemently submitted by the Ld. Counsel that he was yet to see such a non-speaking and cryptic order passed by the any appellate authority. He further made his arguments in detail to justify that in this case penalty was not leviable at all. 3.4. We have considered all these submissions carefully. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd and set off in future years. Thus, apparently, there was no motive with the assessee to make a bogus or inflated claim while filing its return of income. Under these circumstances, it was imperative on the part of the lower authorities to examine the aspect of levy of penalty within the provisions of the Act, independently and with liberal attitude. 3.6. The levy of penalty and its confirmation has far reaching serious implications upon an assessee, since it may also invite prosecution of the assessee. Thus, matters with regard to levy of penalty cannot be taken lightly or casually as it may cause unintended and avoidable hardship to the tax payers. Further, it is well settled law that levy of penalty is not automatic upon the makin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through its various landmark judgments with regard to levy of penalty u/s 271(1)(c) upon a disallowance made by the AO in the assessment order. Immediate reference can be made in this case to judgment of Hon ble Supreme Court in the case of CIT v. Reliance Petro Product Pvt. Ltd, 322 ITR 158 (SC) and Price Waterhouse Coopers Pvt. Ltd. v. CIT 348 ITR 306 (SC). In the case of Reliance Petro Product Pvt. Ltd. (supra), Hon ble Supreme Court came down heavily upon the approach of the assessing officer whereby penalty was levied on automatic basis on making of disallowance of a claim of the assessee in the assessment order. Some of the useful observations of the Hon ble Supreme Court are reproduced hereunder: In order to expose the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rward of the losses to be adjusted against the income of future years. But, here also, Ld. AO went factually wrong, since return of the assessee was filed beyond time limit prescribed u/s 139(1) and therefore, the assessee was not eligible to carry forward loss claimed in the return. Thus, whole premise of the AO was built under misconception of facts and incorrect understanding of law. Above all, Ld. CIT(A) also miserably failed in his duty, by passing a casual order and collapsing the check and balance mechanism envisaged by the statute. The levy of penalty was highly unjustified and the same is directed to be deleted. 4. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 13th July, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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