AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 829
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.... of the Income-tax Act, 1961 ("the Act") by the Learned Assessing Officer ('Ld. AO') and further upheld by the First Appellate Authority is improper, unjustified and contrary to the provisions of the Act. The penalty order be treated as null and void. The Appellant be granted just and proper relief in this respect. 2. On facts and circumstances prevailing in the case and as per provisions of law and scheme of the Act, it be held that the penalty levied u/s 271(1)(c) of the Act by the Ld. AO and further upheld by the First Appellate Authority is bad in law and liable to be quashed, since the penalty proceedings were initiated for one limb of section 271(1)(c) of the Act, whereas the penalty has ultimately been imposed for the other limb. The penalty order be treated as null and void. The Appellant be granted just and proper relief in this respect. 3. The Appellant prays to be allowed to add, amend, modify, rectify, delete, and raise any grounds of appeal at the time of hearing." 5. Facts of the case, in brief, are that the assessee is a company engaged in the business of fabrication manufacturing and assembling of canopy and electrical gensets and has fi....
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....ssued notice u/s 133(6) of the IT Act to both the above parties, however the letters were returned back unserved. Further opportunity was also provided to the assessee to furnish the bills and TDS certificates in respect of payment to these parties but assessee could not furnish the details. Accordingly, the Assessing Officer disallowed the above expenses of Rs. 13,00,000/- and added the same to the income of the assessee and subsequently penalty u/s 271(1)(c) of the IT Act was also levied for furnishing inaccurate particulars of income. Under the above facts and in the circumstances of the case, we are of the considered opinion that the assessee has furnished inaccurate particulars of income and therefore liable for penalty u/s 271(1)(c) of the IT Act, accordingly ground nos.1 & 2 are dismissed. 9. It is the alternate plea of the counsel of the assessee that the penalty, if any, is required to be levied only on the quantum addition which was sustained by Ld. CIT(A). In this regard, we find that the order dated 09.03.2016 passed u/s 143(3) r.w.s. 153A of the IT Act, additions of Rs. 15,87,80,162/- were made, subsequently Ld. CIT(A) vide order dated 28.10.2019 deleted the additio....
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....ppeals for A.Y. 2009-10 and 2010-11 and directed the Assessing Officer to re-calculate the penalty on the basis of addition sustained by Ld. CIT(A). However, in this case, we find that the penalty was rightly calculated on the basis of quantum addition sustained by Ld. CIT(A). Accordingly, we do not find any error in the order passed by Ld. CIT(A) wherein he confirmed the penalty u/s 271(1)(c) of the IT Act levied by the Assessing Officer. Thus, the grounds of appeal raised by the assessee in this appeal are dismissed. 15. In the result, the appeal of the assessee in ITA No.2872/PUN/2025 for A.Y. 2012-13 is dismissed. ITA No.2873/PUN/2025, A.Y. 2013-14 : 16. Facts of the case, in brief, are that the assessee is a company engaged in the business of fabrication manufacturing and assembling of canopy and electrical gensets and has filed its original return of income on 22.11.2013 declaring loss of Rs. 22,83,68,460/-. A search and seizure action was carried out in Agrawal Group of cases on 17.12.2013 wherein the present assessee was also covered u/s 132 of the IT Act. Accordingly, assessment order u/s 143(3) r.w.s. 153A of the IT Act was passed on 09.03.2016 and Rs. Nil income....
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....had no role in the procurement or negotiation of orders. The alleged intermediary services were, in fact, carried out by the appellant's own employees. During the assessment proceedings. the Assessing Officer examined the veracity of the claim by directly verifying from the customers Huawei Telecommunications India Pvt. Ltd. & Viom Networks Ltd. The responses categorically confirmed that M/s. Rathi Super Steel Ltd. had played no role in procuring orders or facilitating any transaction. Thus, the core premise of the appellant's claim that Rathi Super Steel Ltd acted as mediator stood disproved by independent third-party evidence. No contemporaneous evidence such as correspondence, minutes, or communication substantiating the intermediary's role was produced by the appellant. On the contrary, the documentary evidence gathered during search clearly disproved the appellant's claim. Thus, the claim of commission expenditure was not a case of a debatable interpretation but a clear case of making a false claim. Furnishing agreements and deducting TDS cannot substitute for the requirement of proving actual services rendered. Therefore, the appellant's explanation cannot....
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....ome with respect to the sum of Rs. 1,41,20,257/-. 5.6.3 The explanation offered by the assessee that the entire waiver was disclosed in the financial statements under "exceptional items" and therefore there was no concealment, is not sufficient to absolve it from penalty. Disclosure in the financial statements cannot substitute for correct reporting in the return of income. What is material under section 271(1)(c) is whether the particulars furnished in the return are accurate and in accordance with the law. In this case, while the assessee disclosed the fact of waiver, it deliberately adopted an incorrect treatment in the computation of income by reducing even the interest portion as if it were a capital receipt. Such an explanation cannot be regarded as bona fide, because the assessee was aware of the nature of the waiver and its taxability under section 41(1). 5.6.4 It is also important to note that this is not a case of mere difference of opinion or debatable claim. The distinction between waiver of principal (capital in nature) and waiver of interest (revenue in nature and taxable u/s 41(1)) is well established and unambiguous. The assessee had claimed the in....
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....6.8 In view of these facts, I hold that the conditions laid down in Explanation 1 to section 271(1)(c) are fully attracted in respect of the waiver of interest amounting to Rs. 1,41,20,257/-. The assessee has failed to offer a bona fide explanation or substantiate the same with relevant evidence. Accordingly, the penalty levied by the Assessing Officer on this issue is upheld. 5.7 Accordingly, Grounds No. 1 and 2 of the appeal are dismissed." 18. It is the above order against which the assessee is in appeal before this Tribunal. 19. We have heard Ld. counsels from both the sides and perused the material available on record. In this regard, we find that the penalty u/s 271(1)(c) of the IT Act of Rs. 46,59,640/- was levied on the basis of two additions. First on the basis of disallowance of commission expenses of Rs. 2,43,335/- and secondly on the basis of addition of Rs. 1,41,20,527/- u/s 41(1) of the IT Act regarding waiver of interest component on loan in one time settlement. With regard to penalty on the basis of disallowance of commission expenses of Rs. 2,43,335/-, we find that the Assessing Officer conducted enquiry from Viom Networks & Huawai Telecommunication ....
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....from the very beginning that the benefit received or accrued in consequence of the Govt. Resolution dt. 21st May, 1999 are to be spread over from 1977-78 to 1999-2000 which is a period covered in the said GR. The expressions "inaccurate" and "particulars" have been explained by the Hon'ble Supreme Court in the decision of Reliance Petroproducts (P.) Ltd. (supra). We have examined the explanation of the assessee in the backdrop of Expln. 1 of s. 271(1)(c) and it cannot be said that the explanation is not bona fide as the assessee has placed all the facts on record which are required for computation of the income. The only dispute is the applicability of s. 41(1) of the IT Act. As rightly argued by the learned counsel, tax law is such complex it cannot be said that there was some conscious act on the part of the assessee for not considering s. 41(1) to the extent, of benefit accrued vide Govt. Resolution dt. 21st May, 1999 by the reduction of the MSEB liability. We are, therefore, of the opinion that there was no justification on the part of the AO for levying the penalty on the assessee under s. 271(1)(c) of the Act. We, accordingly, delete the penalty levied by the AO and allow....