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TMI Blog2012 (8) TMI 1148X X X X Extracts X X X X X X X X Extracts X X X X ..... faction. Ld. CIT (A)- IV, Surat has also erred to uphold the action of the A.C.I.T. Circle-6, Surat. 2. The A.C.I.T. has erred in law and on facts to levy penalty u/s. 271(1) (c ) of the Act ignoring the fact that the all sundry creditors appearing in the balance sheet as on 31-3-2004 are proved as genuine and disbelieving appellant's explanation penalty was levied. Ld. CIT (A) -IV Surat has also erred to uphold penalty levied by ACIT Circle-6, Surat without considering such vital fact of appellant's case. 3. The ACIT has erred in law and on facts to levy penalty u/s. 271(1)(c ) of the Act without considering the facts and circumstances of the case. Ld. CIT (A)-IV Surat has also erred in directing the ACIT Circle-6,Surat to levy of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The A.O. initiated penalty proceedings u/s. 271(1)(c)of the Act by issuing notice dated 19-12-2006 requiring the assessee to show cause notice as to why the penalty should not be levied on the addition made. In the penalty order dated 30-3-2009 the A.O. contended that the assessee has failed to file any reply to the show cause notice and therefore, he was of the view that the assessee has concealed the particulars of income and has no explanation to offer and accordingly imposed penalty of ₹ 8,61,339/- on the addition of ₹ 24,00,546/-. Against the penalty order the assessee preferred appeal before the Ld. CIT (A). Ld. CIT (A) gave partial relief to the assessee by holding as under:- " I have considered the reasons given by A.O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 13,67,524/- is directed to be deleted." 4. Aggrieved by the order of Ld. CIT (A), assessee is in appeal before us. 5. Before us the Ld. A.R. submitted that though the assessee had submitted the Explanation vide letter dated 3-3-2009 the A.O. levied penalty for the reason that there was no response or submission to the notice issued by the A.O. The Ld. A.R. placed on page 1 & 2 of the paper book the acknowledged copy of the letters submitted before the ACIT. He also submitted that the CIT (A) in its order has given a categorical finding to the effect that the assessee had filed reply vide letter dated 3-3-2009 but the same was not considered by the A.O. It was thus contended that the explanation of assessee was ignored by the A.O. in its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to be carried forward. He placed on record the copy of the order dated 5-12-2007 giving effect to CIT (A)'s order. He also relied on the decision of Karnataka high Court in the case of CIT vs. SLN Trader 341 ITR 235. 6. On the other hand the Ld. D.R. submitted that the assessee failed to produce any sort of evidence either in the form, of confirmation or an agreement from the creditors He submitted that assessee was provided sufficient time to produce the documents but it failed to discharge the onus cast on the assessee. In view of these circumstances; he urged that the A.O. has rightly levied the penalty. 7. We have heard the rival contentions, perused the material on record. It is a fact that the assessee had filed reply vide its le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o intention to avoid payment of tax has been accepted by the Tribunal, no penalty proceedings u/s. 271(1)(c) could be initiated. 10. In the present case of penalty before us, it is seen that the explanation that was tendered by the assessee was ignored and not considered before passing the order u/s. 271(1)(c). In view of the aforesaid facts and respectfully following the decision of the Hon'ble Gujarat High Court we are of the view that the penalty order was passed in violation of principles of natural justice and therefore the order levying penalty cannot be upheld. Even on merits the factual position that emerges is that the assessee has losses to be carried forward to the extent of ₹ 3.73 lacs after giving effect to CIT (A)'s ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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