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TMI Blog2022 (2) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... al of the assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... er dated 21.01.2013, the total income of the assessee was determined by the Assessing Officer at ₹ 1,59,41,190/-, after making the disallowance of ₹ 69,23,010/- being the 25% of the expenses claimed by the assessee on account of unverifiable element involved in the said expenses, TDS compliance etc.. The Assessing Officer also initiated penalty proceedings under Section 271(1)(c) of the Act; and, since there was no satisfactory compliance on the part of the assessee to the notices issued by him during the course of said proceedings, the Assessing Officer proceeded to impose the penalty of ₹ 55,00,000/- under Section 271(1)(c) of the Act vide order dated 26.07.2013. 5. Against the penalty imposed by the Assessing Officer under Section 271(1)(c) of the Act, an appeal was preferred by the assessee before the learned CIT(A) which was dismissed by the learned CIT(A) vide order dated 25.07.2014 thereby confirming the penalty imposed by the Assessing Officer under Section 271(1)(c) of the Act. The learned CIT(A) held that no details were furnished by the assessee either during the course of quantum proceedings or during the course of penalty proceedings to support and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is made, the penalty under Section 271(1)(c) is not attracted. 7. The learned Departmental Representative, on the other hand, submitted that there was no satisfactory compliance on the part of the assessee during the course of assessment proceedings before the Assessing Officer as well as during the course of appellate proceedings before learned CIT(A); and, in the absence of anything brought on record by the assessee to support and substantiate its claim for the expenses made under various heads, the Assessing Officer had no option but to make a disallowance out of the said expenses on ad-hoc basis. He contended that the assessee thus could not prove the genuineness of the various expenses claimed by it and the penalty imposed by the Assessing Officer under Section 271(1)(c) of the Act thus was rightly confirmed by the learned CIT(A) by relying on the decision of Allahabad bench of the ITAT in the case of R.K. Brothers (supra). 8. We have heard the rival contentions and also perused the material available on record. The issue for consideration before us is whether the penalty imposed under Section 271(1)(c) of the Act can be sustained for the disallowance made on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not leviable." 11. It may be useful to refer to the decision of Mumbai Tribunal in the case of DCIT v M/s Marksans Pharma in ITA No.7278/Mum/2016. In this case, assessee which was engaged in the business of Film Making and in its profit & loss account, claimed a sum of ₹ 22,05,138/- as technical and professional expenses and ₹ 3,00,000/- as publicity expenses. The AO noted that on these payments, the assessee has not deducted TDS as required and accordingly he made disallowance u/s. 40(a)(ia). He further noticed that assessee has claimed various film production expenses and administrative expenses which were not open to full verification, and accordingly he made ad-hoc disallowance @ of 20%, aggregating to ₹ 9,83,145/-. In the first appeal, it appears that all these disallowances were not pressed before the Ld. CIT(A) by the assessee. The AO after invoking the provisions of Explanation 1 to section 271(1)(c), levied the penalty on these disallowances. Even the Ld. CIT(A) too has confirmed the levy of penalty on the aforesaid disallowance, firstly on the ground that assessee has failed to discharge its onus during the course of assessment proceedings as well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the penalty proceedings observed as under:- "In such cases where the income of the assessee has been assessed on estimate basis and addition has been made on the basis of estimate and not on account of any concrete evidence of concealment being found, there is no merit in the levy of penalty for concealment u/s 271(1)(c) of the Act." 14. The Hon'ble Mumbai Tribunal in the case of Asstt. Commissioner of Income Tax v. Remi Electrotechnik Ltd in ITA no.6376/Mum/2019, while quashing penalty proceedings on the basis of disallowances on estimate basis, observed as under:- "As it transpires from the record available before us that the Assessing Officer levied penalty under section 271(1)(c) of the Act on estimate basis without any evidence on record with regard to concealment of income. Penalty under section 271(1)(c) of the Act is leviable to be imposed only where the assessee has concealed its particulars of income or furnished inaccurate particulars. Action of making addition on ad-hoc basis does not result into imposition of penalty u/s 271(1)(c) of the Act and hence cannot be termed as either concealment or furnishing of inaccurate particulars of income….." 15. The Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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