2014 (6) TMI 370

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....bbed together and disposed of in this combined order for the sake of convenience. 2. Briefly the facts are, the assessee a company is engaged in transport business. The assessee in regular course has filed its returns of income for the assessment years under consideration declaring income as under: AY Income (Rs.) 2000-01 3,84,45,650/- 2001-02 2,94,29,440/- 2002-03 4,73,49,740/- 2003-04 5,66,87,250/- 2004-05 1,84,62,310/-   3. Similarly for AY 2005-06 assessee has filed his return of income declaring income of Rs. 2,61,95,600/-. During the assessment proceeding the Assessing Officer while examining the books of account noticed that the assessee has debited expenditure towards commission paym....

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....d passed an order on 11/12/2012 by directing the Assessing Officer to restrict the penalty u/s 271(1)(c) to the disallowance of 15% on commission payments sustained by the Tribunal. Still aggrieved with the order of the CIT(A) sustaining part of the penalty for AY 2005-06, the assessee preferred appeal before the ITAT. The ITAT in ITA No. 195/Hyd/2013 and ITA No. 233/Hyd/2013 dated 27/09/2013 deleted the penalty imposed by holding as under: "16. Since in the facts of the present case, the disallowance out of commission payments sustained by the Tribunal is merely by estimation of the excess amount of expenditure which the assessee might have been claimed by the assessee, and further, since such disallowance has been made on the basis of ....

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....t in the case of CIT V/s. K.L. Mangal Sain(107 ITR 598), when the Assessing Officer is not able to prove that the assessee was guilty of fraud or gross or willful negligence, penalty cannot be sustained. If, looking to the nature of the business, particular method of accounting is adopted by the assessee for booking the expenditure, but the Assessing Officer is not satisfied with the method of accounts kept by the assessee and the book results are rejected, there is no failure to return correct income due to fraud, gross or willful neglect, as held by the Bombay High Court in the case of CIT V/s. Mohammed Yakub Mohd. Ibrahim & Co. (143 ITR 67). Sometimes, the Assessing Officer estimates the income of the assessee and thereafter the appellat....

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....e on hand in the light of the settled legal principles laid down by various courts as discussed above, we are of the view that this is not a fit case for levy of penalty. We accordingly cancel the entire penalty under S.271(1)(c) of the Act levied by the Assessing Officer. Consequently, appeal of the assessee is allowed." 4. When the appeals against the penalty orders passed for the impugned assessment years came up for hearing before the CIT(A), the assessee brought to the notice of the CIT(A) the aforesaid order of the Tribunal in its own case for AY 2005-06 and requested for deleting the penalties. The CIT(A) after examining assessee's submissions in the light of facts on record and going through the order of the Tribunal (supra) dele....