2017 (8) TMI 75

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....ts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming penalty of Rs. 24,40,094/- levied under Section 271(1)(c)of the Act. 3. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming penalty u/s 271(1)(c) of the Act on the following additions and disallowances made by the A.O. S. No. Particulars Amount-Rs. (i) Addition made under section 41(1) on account of unconfirmed liabilities 66,83,450 Tii) Addition on account of sundry creditor, Sagar Kakkar 1,75,000 (iii) Addition on account of loan adjusted in the ledger of Saraswati Printer 9,98,014 (iv) Disallowance under Section 40A(3) 40,283 4. On the facts and ci....

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....eviable in these cases." 2. The brief facts of the case are that the assessment of the appellant was completed u/s. 143(3) of the IT Act on 23.12.2009 at a loss of Rs.(-) 28,26,655/- as against loss declared by the assessee at Rs. (-) 1,07,72,552/-, thereby making certain additions, as enumerated in the assessment order dated 23.12.2009. The assessment order was challenged by appellant in appeal before the ld. CIT(A) who after considering the submissions of the assessee and the facts & circumstances of the case, sustained the additions as mentioned hereinabove in the table given in grounds of this appeal. The AO, on the basis of the additions sustained by ld. CIT(A), initiated penalty proceedings u/s. 271(1)(c) of the IT Act and after con....

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....aid at the end of the year, the AO added the same invoking the provisions of Section 41 of the Act. The assessee has very clearly submitted before the AO that since the business of assessee has been closed and payments could not be made, these parties did not confirm the balances. During the penalty proceedings in his reply dated 30.11.2010 (PB Pg. 16), the assessee has submitted that out of these six parties, partial payment to two of the parties have been made in the subsequent year. One of the parties, i.e. Usha International has adjusted the amount as advance for the booking of the show in the subsequent year and one of the parties has filed the suit for recovery against the assessee. All the documents pertaining to the said submission ....

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....ed. The assessee has made complete disclosure, the AO got all the facts and figures from the documents filed by the assessee only. In view of the above facts that payment has been made in the next year, the expenses cannot be said to be bogus. It was also just a claim which was disallowed by the assessee, penalty u/s271(1)(c) cannot be levied. Reliance Petro Products Ltd vs. CIT 322 ITR 158 (SC) Addition on account of loan adjusted The AO made addition u/s 68 of the Act at page 3 of his order u/s 143(3) of the Act. The penalty has been levied only on addition made as the AO not getting satisfied by the same. Penalty u/s 271(1)(c) cannot be levied on an addition made under section 68 of the Act, in view of the fact that there ....