2014 (1) TMI 807

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.... the ITAT has substantially erred in law in holding that penalty u/S.271(1)(c) cannot be levied in a case of negative income?" [2.0] That the AO passed the order under section 143(3) of the Income Tax Act, 1961 [hereinafter referred to as "Act"] for the assessment year in question making certain additions with regard to the NIL in gross profit and unexplained cash credit. It appears that the assessee did not prefer the appeal against the quantum of additions. Pursuant to the assessment order, AO initiated the penalty proceedings. Various showcause notices were issued to the assessee, however, there was no response to the showcause notices issued and therefore, the AO proceeded to pass an ex parte order on the basis of the facts on record. ....

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....whether on merits the penalty order can be sustained or not, more particularly,when the assessee had not preferred appeal against the quantum addition. Therefore, it is requested to allow the present appeal. [4.0] Shri S.N. Divatia, learned advocate appearing on behalf of the respondent - assessee is not in a position to point out any decision contrary to the decision of the Hon'ble Supreme Court in the case of Gold Coin Health Food Pvt. Ltd. (Supra). However, has submitted that as the learned ITAT has not gone into the merits of the case with respect to the penalty imposed under section 271(1)(c) of the Act and therefore, the matter may be restored to the file of the learned ITAT. [5.0] Heard Mrs. Mauna Bhatt, learned advocate appearing ....