2012 (2) TMI 171

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....0/-. Assessment order was passed making several additions and the taxable income was assessed at Rs.2,59,52,863/-. The Assessing Officer had disallowed bad debts on three heads namely, (i) subsidy not received from the Government of Rs.7,18,730/-, (ii) special drought discount of Rs.79,03,809/- and (iii) dealers discount of Rs.51,04,000/-. 3. The CIT(Appeals) in quantum proceedings granted substantial relief to the assessee and deleted most of additions made by the Assessing Officer except the three additions mentioned above. As a result of the order passed by the CIT(Appeals) in the quantum proceedings, the taxable income of the assessee for the assessment year 2001-02 was assessed at a negative figure of Rs.4,35,20,671/-. The ....

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....he assessee in the penalty proceedings. The respondent-assessee in response to the said notice filed a detailed reply. Along with the reply the respondent-assessee placed on record details of 28 parties who were given special drought discount and dealer discount. The assessee had filed before us the paper book, which was filed before ITAT. The list of said 28 parties is enclosed in the said paper book. Along with the details, confirmations from the debtors, who were given dealer discount and special drought discount, were furnished. It was stated that no payments towards the said discounts were received. 7. On the question of subsidy the respondent-assessee had placed and submitted to the Assessing Officer the relevant papers writing off....

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....ssee did not comply with the requirements of notices issued, the assessment was framed u/s 144/143(3) on the basis of material available on record and accordingly disallowed the above expenses for want of verification. In appeal the learned CIT(A) also confirmed the above disallowances." 9. This is not an appropriate way of dealing with the assessee's submission in the penalty proceedings when evidence and material was placed before the Assessing Officer. The Assessee is entitled to produce new and relevant material/documents in the penalty proceedings. We may also record that the CIT(Appeals) in quantum proceedings had adversely commented upon the assessment order passed under Section 144 of the Act and had stated that the respondent-as....