TaxTMI 
TaxTMI 
2014 (2) TMI 423
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....14.10 lacs, committed by one of its employees. It was noticed that Shri S.G. Teredesai embezzled and defrauded other group companies as well, which included M/s Universal Medicare Pvt. Ltd. 3. The AO rejected the claim and explanation of the assessee and added back Rs. 14.10 lacs and also levied the penalty equal to the tax amount. 4. Aggrieved, the assessee approached the CIT(A), in penalty proceedings, who held, "2.3 I have considered the facts of the case. In the revised return of income the appellant claimed defalcation loss of Rs. 14.10 lacs. The appellant was part of group companies M/s. Universal Medicare Pvt. Ltd. It was an admitted fact that Shri S.G. Teredesai, Vice President, Finance & Accounts committed fraud on the appellant....
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....ssing of assessment order and therefore could not have been filed during assessment proceedings. Considering the entirety of facts and circumstances, it was an admitted fact that the said Shri S.G. Teredesai committed defraud on the appellant company as a result of which the appellant suffered defalcation loss of Rs. 14.10 lacs. The report of Investigator M/s. Chetan Dalal Investigation and Management Services were on record. Besides it was also admitted facts that the Police also investigated such defraud committed by the said S.C. Teredesai and the case was pending in the Civil Court. In the facts and circumstances, the appellant's claim was based on bonafide and justified facts therefore, could not be held to be a bogus claim. During ass....
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....lanation offered by appellant during assessment, penalty and penalty appellate proceedings was bonafide, satisfactory and justified. Such explanation was not held to be unsatisfactory or false. In the facts and circumstances, the provisions of sec. 271(1)(c) were not attracted. The penalty levied by AO is, therefore, deleted". 5. The department is against this order of the CIT(A), before the ITAT. 6. At the time of hearing, the AR placed the copies of order of the sister concerns, wherein, on identical facts, the penalty levied had been cancelled, which are 1 ITAT No. 5256/Mum/2011 Penalty Dropped order of our sister concern Capsulation Services Pvt. Ltd. for A.Y. 2003-04 2 ITAT No. 6078/Mum/2010 Penalty Dropped order of our sister co....
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....ount of additions/disallowances. ix. FAA deleted the penalty imposed by the AO. x. AO has preferred second appeal for 4 additions/disallowances out of the 9 items 5.1 Considering the above factual matrix, we are of the opinion that it is not a fit case for imposing penalty u/s 271(1)(c) of the Act for furnishing inaccurate particulars/concealing the particulars of income. Penalty is imposed where an assessee conceals his income, so that it does not suffer taxation. In the case under consideration, assessee-company was cheated by its employees and the AO has admitted the said fact by allowing defalcation in subsequent A.Y. In these peculiar circumstances, if the assessee could not support the claim made by it, during the assessment procee....