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of <h1>ITAT allows appeals, removes penalties on quantum enhancements under section 40(a)(ia) for specific assessment years</h1> <h3>LG Electronics India (P) Ltd. Versus Commissioner of Income Tax (Appeals), Noida</h3> LG Electronics India (P) Ltd. Versus Commissioner of Income Tax (Appeals), Noida - TMI Issues:- Appeal against penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 for assessment years 2005-06 and 2006-07.- Identical issues in both appeals heard together.Analysis:1. Penalty Imposed under Section 271(1)(c) for Assessment Year 2005-06:- Assessee challenged the penalty for alleged concealment and furnishing inaccurate particulars of income.- Grounds included lack of opportunity to be heard, absence of recorded satisfaction for initiating penalty, and failure to specify exact charge for penalty.- Assessee argued that all material facts were disclosed, claims were justified, and no penalty should be levied on debatable issues.- Disallowance under section 40(a)(ia) was contested based on Supreme Court precedent.- ITAT held quantum enhancement void ab initio, leading to deletion of penalties.2. Penalty Imposed under Section 271(1)(c) for Assessment Year 2006-07:- Similar grounds raised as in the 2005-06 appeal.- Assessee contended that quantum enhancement on Advertising, Marketing, and Promotion expenses was restored for fresh adjudication.- ITAT deleted penalties imposed on enhancements u/s 40(a)(ia) for both years.- Penalties related to Advertising expenses also directed to be restored for reconsideration.3. Judicial Proceedings and Decisions:- Assessee's representative highlighted ITAT's decisions favoring the assessee in quantum appeals for both years.- ITAT found quantum additions void ab initio, resulting in deletion of penalties.- Disallowances under section 40(a)(ia) and Advertising expenses enhancements were crucial issues in the appeals.- CIT-DR supported the CIT(A)'s order but could not counter the ITAT's deletion of quantum additions.- ITAT directed restoration of penalties related to Advertising expenses for fresh adjudication.4. Final Decision and Outcome:- ITAT allowed both appeals, deleting penalties imposed on quantum enhancements u/s 40(a)(ia) for both assessment years.- Penalties regarding Advertising expenses enhancements were also directed to be restored for reconsideration.- Decision pronounced on 7th September 2018, serving the interest of justice in the matter.
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