TaxTMI 
TaxTMI 
2017 (1) TMI 1445
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....1 by the CIT on the ground that the AO has failed to initiate penalty proceedings u/s 271(1)(c) of the Act in the re-assessment order. 3. Brief facts of the case are that the assessment was completed by the AO under section 143(3) of the Act on 31.7.2009 by assessing the total income of Rs. 62,06,64,040/- by making disallowances to the tune of Rs. 32,14,838/- on account of gift expenses, Chandla expenses and sundry expenses. The disallowances of gift expenses amounting to Rs. 1,70,503/- and sundry expenses of Rs. 30,37,680/- on account of expenses on behalf of the clients for making various payments were made by the AO by following the earlier assessments. In the year 1997-98 similar expenses were disallowed and on appeal, before the Tri....
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....the basis of assumption that expenditure to the extent of 25% was paid to Government employees and hence, not allowable as the same is covered by Explanation to section 37(1) of the Income Tax Act. On these facts, assessee submitted that expenditure was disallowed on estimated basis and therefore, there is no question of levy of penalty. The assessee has also relied on the decision of Supreme Court in the-case of CIT vs Reliance Petro Products(P)Ltd reported in 332 ITR 158. The assessee submitted that the order of the assessing officer is not erroneous and also not prejudicial to the interest of revenue and hence provision of section 263 is not applicable". 5. The CIT, after considering the contentions and submissions of the assessee and....
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....e Act dated 31.7.2005 meaning thereby that after examining the nature of addition, the AO did not feel the case of the assessee to be worth and fit for initiation of penalty proceedings under section 271(1)(c) of the Act. The ld. Counsel, heavily relied upon the order of the Hon'ble Supreme Court in the case of CIT vs. Reliance Petroproducts Pvt Ltd. (2010) 322 ITR 158 (SC). 7. The ld. DR argued that there is no whisper of penalty proceedings in the assessment order and therefore the Assessing Officer overlooked the provisions of section 271(1) (c) of the Act and the CIT rightly directed the AO to initiate penalty proceedings against the assessee and therefore the order passed by the AO was erroneous and prejudicial to the interest of re....
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....d there is no tailor made formula to levy penalty under section 271(1)(c) of the Act. Moreover the assessee counsel submitted before the ld CIT that the penalty proceedings were not attracted in view of the apex court decisions in the case of CIT V/s Reliance Petroproduct Pvt.Ltd -322 ITR 158 (SC), wherein it has been held by the Hon'ble Supreme Court that the "claim which may be wrong or not accepted or was not acceptable to revenue, that by itself would not attract penalty under section 271(1)(c) of the Act.". In view of these legal aspects, we are of the considered opinion that non-initiation of penalty is neither erroneous nor prejudicial to the interest of revenue as has been opined by the CIT and the exercise of revisionary power unde....