Soma Textiles & Industries Ltd. Vs DCIT (ITAT Ahmedabad)
The appeals were filed by the assessee against orders of the Commissioner of Income Tax (Appeals) confirming penalties imposed under Section 271(1)(c) of the Income-tax Act for Assessment Years 2009-10 and 2010-11.
For Assessment Year 2009-10, penalty of ₹1,38,90,556 was levied on various additions including adjustment in arm’s length price (ALP) for international transactions, disallowance of GDR issue expenses, disallowance of miscellaneous (MODVAT) expenses, addition of foreign exchange gain, and TDS reconciliation differences. The Assessing Officer held that the assessee furnished inaccurate particulars and concealed income.
The CIT(A) confirmed the penalty on all counts. It held that in respect of ALP adjustment, the assessee failed to demonstrate good faith and due diligence as required under Explanation 7 to Section 271(1)(c). For GDR expenses, the claim was contrary to settled law laid down by the Supreme Court and was not bona fide. For MODVAT expenses, the assessee failed to substantiate the claim with evidence. With regard to foreign exchange gain and TDS differences, the assessee admitted non-disclosure of income in the return and failed to provide a valid explanation.
Before the Tribunal, the assessee challenged the confirmation of penalty. The Tribunal examined the quantum proceedings and findings of earlier decisions in the assessee’s own case.
