TaxTMI 
TaxTMI 
2022 (8) TMI 781
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....wing grounds of appeal:- "1. The learned CIT(A) has erred in not affording an opportunity of hearing to the appellant and in passing an ex parte order which is in violation of the Principles of Natural Justice. 2. The learned CIT(A) has erred in law and on facts in confirming the action of AO in initiating and levying penalty under section 271(1)(c) of the Act without recording mandatory satisfaction as contemplated under the Act at the time of framing the assessment order. 3. The learned CIT(A) has erred both in law and on the facts of the case in confirming the penalty when show cause notice u/s. 274 r.w.s. 271(1)(c) of the Act did not specify the exact charge as to whether the penalty is levied for concealment or furnishing of inac....
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....Ld. CIT(Appeals), who dismissed the assessee's appeal vide order dated 24-03-2016. Accordingly, penalty proceedings u/s. 271(1)(c) of the Act on the below issues: 1. Addition due to sundry creditors: Rs. 19,98,102/- 2. disallowance of expenses claimed under section 35D Rs. 47,345/- 3. addition as per AIR information Rs. 8,650/- 3.1. To give a factual background of issues under consideration, with regard to the issue of addition on account of sundry creditors amounting to Rs. 19,98,102/-, during the course of assessment proceedings despite several opportunities, the assessee was unable to furnish the confirmation from creditors as requisitioned by the Assessing Officer. Hence addition to the tune of Rs. 19,98,102/- was made duri....
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....e assessee by the ITAT in quantum proceedings, penalty u/s. 271(1)(c) of the Act is liable to be set aside. Regarding the addition on account of disallowance under section 35D of the Act, the counsel for assessee submitted that the issue is debatable one and placed reliance on the decision of DCIT v. M/s. Mercury Projects Private Limited (ITA number 450/Hyd/2017), wherein the ITAT held that expenses incurred for increase in authorised share capital is eligible for deduction under section 35D of the Act. Accordingly, the counsel for the assessee argued that even though the assessee did not press this issue before Ld. CIT(Appeals) in quantum proceedings, so far as penalty u/s. 271(1)(c) of the Act is concerned since the issue is debatable one....
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....19,98,102/- in respect of sundry creditors pertaining to the above referred two parties on the ground that required confirmation was not furnished by the assessee. Subsequently, the assessee has furnished the confirmation before the ld. CIT(A) as additional evidences under rule 46A of the Act. The ld. CIT(A) has admitted the additional evidences and called remand report from the assessing officer. In the remand report, the assessing officer has stated that in respect of sundry creditors namely Westwind Logistics Pvt. Ltd. the necessary books of account and other document were maintained and TDS was deducted and necessary bills were verified therefore, stated that the appeal be decided on merit. In respect of other sundry creditors namely M/....
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....ssessing officer has clearly mentioned in his remand report that bills were verified and TDS was deducted. Therefore, considering the aforesaid facts and circumstances, we are not inclined with the decision of the ld. CIT(A) for sustaining the additions on assumption basis without disproving the relevant material submitted by the assessee. Therefore, the appeal of the assessee is allowed." 4.1. Since the issues has been decided in favour of the assessee by IT AT in quantum proceedings, penalty u/s. 271(1)(c) of the Act is hereby directed to be deleted in respect of the aforesaid amount of Rs. 19,98,102/-. 4.2. With reference to the amount of Rs. 47,345/- being the expenditure incurred for increase in the authorised share capital, we are o....