TaxTMI 
TaxTMI 
2026 (5) TMI 1421
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.... under section 271(1)(c) of the Act. Facts of the Case 2. Brief facts of the case are that a search and seizure action under section 132 and survey action under section 133A of the Act were carried out on 24.09.2009 in the case of Temptation Foods Group by ADIT (Inv.), Unit-III, Mumbai. During the course of such search proceedings, residential premises and bank lockers of the assessee were also covered and certain documents pertaining to the assessee for the relevant assessment year were found and seized. On the basis of such material, proceedings under section 153C of the Act were initiated against the assessee and notice under section 153C came to be issued. Consequent to the search, the case of the assessee was centralised to the charge of ACIT, Central Circle-11, Mumbai and subsequently transferred to ACIT, Central Circle-13, Mumbai. 3. The original return of income for A.Y. 2006-07 was filed electronically on 01.04.2008 declaring loss of Rs. 32,47,898/-. In response to notice issued under section 153C dated 23.03.2010, the assessee filed return on 16.04.2010 reiterating the returned loss at Rs. 32,47,898/-. Thereafter, notices under sections 143(2) and 142(1)along wit....
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....) r.w.s. 153C dated 21.12.2011. Simultaneously, penalty proceedings under section 271(1)(c) of the Act were also initiated for furnishing inaccurate particulars of income and concealment thereof. 7. Thereafter, penalty proceedings under section 271(1)(c) of the Act were initiated. During the course of penalty proceedings, the assessee submitted before the Assessing Officer that the additions arose merely on account of difference of opinion and there was neither concealment of income nor furnishing of inaccurate particulars. However, according to the Assessing Officer, the assessee merely furnished general explanations without specifically justifying the claims relating to society charges and depreciation. The Assessing Officer further observed that the assessee had not challenged the additions in appeal and therefore inferred that the assessee had accepted the incorrect claims made in the return of income. Accordingly, the Assessing Officer held that the assessee had furnished inaccurate particulars of income aggregating to Rs. 31,61,688/- and consequently imposed minimum penalty under section 271(1)(c) at 100% of tax sought to be evaded amounting to Rs. 9,76,962/-. 8. Aggrie....
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....7], ITO vs. Mokul Finance (P.) Ltd. [110 TTJ 445], CIT vs. Rampur Timber & Turnery Co. Ltd. [129 ITR 58], Nakodar Bus Service (P.) Ltd. vs. CIT [179 ITR 506], CIT vs. Ganga Properties Ltd. [199 ITR 94] and GE Capital Transportation Financial Services Ltd. vs. ACIT [17 SOT 173] in support of the contention that expenditure incurred for keeping business alive constituted allowable business expenditure. 11. In respect of depreciation disallowance, the assessee submitted that the disallowance was not based upon any incriminating material found during search proceedings and had merely been made by relying upon findings recorded in earlier assessment years. It was submitted that depreciation in A.Y. 1998-99 had been disallowed only in relation to "mother plants" which had already been sold during that year itself and therefore no depreciation on such mother plants had been claimed during the year under consideration. According to the assessee, the Assessing Officer had mechanically followed earlier years without recording any independent finding in respect of depreciation claimed during the relevant year. 12. The assessee further contended before the learned CIT(A) that mere disall....
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....enses were bogus or ingenuine. Accordingly, the learned CIT(A) deleted the penalty of Rs. 9,76,962/- levied by the Assessing Officer and allowed the appeal of the assessee. Since the appeal was allowed on merits, the additional legal grounds challenging validity of assessment and penalty proceedings were treated as academic and therefore not separately adjudicated. 15. Aggrieved by the aforesaid order of the learned CIT(A), the Revenue is in appeal before us and the assessee has filed Cross Objection. 16. The grounds raised by the Revenue in appeal read as under: 1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) was justified in deleting the penalty levied by Assessing Officer when assessee itself has accepted the addition made during the assessment by not filing appeal against the additions made in the assessment order? 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) justified in deleting the penalty when the substantial additions were not contested by assessee thereby implied that the assessee had furnished inaccurate particulars of income regarding claim of society charges and....
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....rs relating to such claims had duly been disclosed in the books of account and return of income filed by the assessee. Therefore, according to the learned AR, no penalty under section 271(1)(c) of the Act could be levied in respect of such additions/disallowances. 20. In support of the aforesaid contentions, the learned AR placed heavy reliance upon the decision of the Coordinate Benchin assessee's own case for A.Y. 2007-08 in ITA No. 2926/Mum/2025 and CO No. 123/Mum/2025 dated 21.07.2025. The learned AR specifically invited our attention to the findings recorded by the Coordinate Bench wherein it was observed that the assessment had been framed under section 153A pursuant to jurisdiction assumed under section 153C on the basis of search conducted in the case of another person and nowhere in the assessment order had it been stated that any incriminating material was found to establish that the expenses claimed by the assessee were not genuine or not incurred for the purpose of business. The Coordinate Bench further observed that such ad hoc disallowances were outside the purview of assessment under section 153C/143(3) in an unabated assessment year and therefore no penalty under....
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....ncriminating material found during the course of search proceedings. The disallowance of society charges was made merely for want of supporting documentary evidences and the depreciation disallowance was made by following the treatment given in earlier assessment years. The assessment order nowhere refers to any seized material or incriminating document evidencing that the claims made by the assessee were bogus or false. 24. We further note that the assessment year under consideration was an unabated assessment year on the date of search and therefore, in absence of any incriminating material found during the course of search, no addition/disallowance could have been made while framing assessment under section 153C of the Act. The Coordinate Bench in assessee's own case for A.Y. 2007-08 in ITA No. 2926/Mum/2025 and CO No. 123/Mum/2025 dated 21.07.2025 had occasion to consider an identical controversy arising out of levy of penalty under section 271(1)(c) on disallowance of routine expenses made in assessment completed under section 143(3) r.w.s. 153C of the Act. 25. We find that in the aforesaid decision, the Coordinate Bench after considering identical facts observed as unde....