TaxTMI 
TaxTMI 
2020 (5) TMI 462
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....mpany, partly disallowed in the hands of that company, added in the hands of the assessee as perquisites. The facts are identical in both the cases; therefore, both these appeals are disposed of by this common order. ITA No 6470/Del/2016 2. First, we come to the appeal in the case of Late Shri Jaswant singh Madhok, This is an appeal filed by the assessee against the order of the ld CIT (A)-25, New Delhi dated 29.09.2016 for the Assessment Year 2012-13. 3. The assessee has raised the following grounds of appeal:- "1. That the Id. CIT(A) has erred in sustaining the penalty of Rs. 29,331/- imposed u/s 271(1)(c) of the Act without appreciating the facts of the case and detailed submissions made by the appellant. 2.....
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....to submit the basis as to how these expenses are related with the business of Jay Polychem Ltd. He held that these expenses were incurred for the personal purposes of the director as those expenses have been disallowed in the hands of that company, as they were not incurred 'wholly and exclusively' for the purpose of the business of that company. Since the assessee has derived benefit from these expenses, they were added to the total income of the assessee as perquisites. The penalty proceedings under section 271 (1)( c) f the act was also initiated. Accordingly the total income was assessed at Rs. 14824423/-. In the assessment, order while initiating the penalty proceedings the learned assessing officer did not say whether assessee has fur....
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....led its income to the extent of Rs. 9 4924/- and levied the penalty of Rs. 29331/-. Thus, penalty order was passed on 22/3/2016. 6. The assessee challenged the same before the learned CIT - A. The learned CIT - A confirmed the penalty on the merits, for the reason that none attended before him. However, he did not answer each of the grounds of the appeal but dealt with all these grounds cumulatively and confirmed the penalty. Assessee aggrieved with the order of the learned CIT - A has preferred this appeal. 7. None appeared on behalf of the assessee; therefore, the issue is decided on the merits of the case as per information available on record. 8. The learned DR vehemently supported the orders of the lower authorities. 9. We ....
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....party. Only that company has claimed this expenditure as allowable expenditure in its return of income. Out of total expenditure only approximately 10% of the expenditure were not found to have been incurred for the business purposes of that company, therefore for that amount same was added to the income of the assessee. Therefore, merely because in expenditure is not held to be expenditure incurred wholly and exclusively for the purposes of the business of third party, resulting in to addition in the hands of the company, cannot result into levy of the penalty in the hands of the assessee. Firstly, the addition has been made on account of perquisites. For the taxation of perquisite, the AO should have established employer-employee relat....
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....pany. In all these facts, the assessee has not concealed any particulars of his income. This was the statement of the assessee during the course of search also. This is confirmed by the directors of the company who were the relatives of the assessee. In view of this we do not find any merit in levy of the penalty on the assessee of Rs. 29331/-. 10. There is another facet of the issue also. During the course of assessment proceedings where the assessment has been made, while making an addition, the learned assessing officer has not recorded any satisfaction whether the assessee has concealed his income or has furnished inaccurate particulars of income. At the time of levy of the penalty in the penalty order the assessing officer in para n....
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.... that order it is so held that the notice issued by the AO would be bad in law if it did not specify which limb of Section 271(1) (c) the penalty proceedings had been initiated under i.e. whether for concealment of particulars of income or for furnishing of inaccurate particulars of income. Therefore, also, the penalty levied by the learned assessing officer and confirmed by the learned CIT - A cannot be upheld. In the result, we direct the learned assessing officer to delete the penalty of Rs. 20 9331/- imposed under section 271 (1)( c) of the act. 11. Accordingly, appeal filed by the assessee is allowed. ITA No 6471/Del/2016 12. Now become to the appeal in ITA number 6471/del/2016 in case of Smt Sumohita Kaur, where the AO made a....