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TMI Blog2022 (8) TMI 781X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT(Appeals), since various Tribunals have held that expenses incurred towards increased in authorised share capital is eligible for deduction under section 35D of the Act, and therefore since the issue is debatable one, hence penalty u/s. 271(1)(c) of the Act on this issue is hereby being set aside. Addition as per AIR information - Addition has been made purely on account of the AIR report and no income has been received by the assessee. In our considered view, looking at the quantum of addition, and in view of the fact that the assessing officer has not been able bring anything on record to substantiate that this amount either accrued to the assessee/or has been received by the assessee, but relied only on the AIR report to hold t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lment or furnishing of inaccurate particulars of income. Such a defect renders the penalty void ab initio and is also a violation of the principles of natural justice. 4. The learned CIT(A) has erred both in law and on the facts of the case in confirming the penalty of Rs. 6,34,716/- levied u/s. 271(1)(c) of the Act. 5. In any case, the impugned penalty order is barred by limitation and thus without jurisdiction and illegal. 6. In any case, quantification of the penalty is erroneous and excessive 7. Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortunities, the assessee was unable to furnish the confirmation from creditors as requisitioned by the Assessing Officer. Hence addition to the tune of Rs. 19,98,102/- was made during assessment proceedings, which were later confirmed by Ld. CIT(Appeals). Regarding disallowance under section 35D of the Act, the AO disallowed an amount of Rs. 47,345/- being expenses incurred for increase in the authorised share capital of the company. The AO held that this amount was not eligible for deduction under section 35D of the Act. The assessee did not press this issue in appeal against before Ld. CIT(Appeals) and accepted the addition. Regarding the third addition, as per AIR information, it was noticed that the assessee had earned brokerage income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... though the assessee did not press this issue before Ld. CIT(Appeals) in quantum proceedings, so far as penalty u/s. 271(1)(c) of the Act is concerned since the issue is debatable one, penalty is liable to be set aside. Regarding the addition of Rs. 8,650/- on account of lesser amount shown as brokerage income by the assessee during the impugned assessment year as compared to the amount on which TDS has been deducted by the payer, the counsel for the assessee submitted that the assessee has not received the differential amount alleged to be the income of the assessee on account of brokerage income either during the impugned year nor in any of preceding years till date. Thus, merely if the payer has committed a mistake in filing TDS return a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other document were maintained and TDS was deducted and necessary bills were verified therefore, stated that the appeal be decided on merit. In respect of other sundry creditors namely M/s. Kankane Oil Mills, the assessing officer has stated that notice issued to it was returned un-served. However, on perusal of the material kept in the paper book, it is noticed that assessee has furnished the copy of sale invoice pertaining to Kankane Oil Mill and copy of contract note, copy of challan, copy of receipt of the agricultural production of marketing committee, copy of form no. 403 of the commercial sales tax department certifying that goods were distributed from Kankane Oil Mill to place of the assessee. Further, the assessee has also placed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of the aforesaid amount of Rs. 19,98,102/-. 4.2. With reference to the amount of Rs. 47,345/- being the expenditure incurred for increase in the authorised share capital, we are of the considered view that even if the assessee did not press this issue in quantum proceedings before Ld. CIT(Appeals), since various Tribunals have held that expenses incurred towards increased in authorised share capital is eligible for deduction under section 35D of the Act, and therefore since the issue is debatable one, hence penalty u/s. 271(1)(c) of the Act on this issue is hereby being set aside. We note that apart from the decision of DCIT v. M/s. Mercury Projects Private Limited (ITA number 450/Hyd/2017) on which reliance has been placed by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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