Case Law Details
DCIT Vs. Maharashtra State Power Generation Co. Ltd. (ITAT Mumbai)
The issue under consideration is whether the cancellation of the penalty u/s 271(1)(c) by the CIT(A) is justified in law?
ITAT states that, the claim of the assessee that no penalty under Sec. 271(1)(c) could have been validly levied in its hands in respect of the said issue. Also, ITAT find that the assessee in the course of the penalty proceedings before the A.O, and also in the course of the appellate proceedings before the CIT(A) had satisfactorily explained that the coal cost freight issue (Bhusaval) was an expense allowable under Sec.37(1) of the Act, which for the said reason was claimed as a deduction in its revised return of income on the basis of the audit report. ITAT find that the lower authorities had not recorded any observation which could dislodge the veracity of the aforesaid claim of expense so raised by the assessee in its revised return of income. Apart there from, ITAT are also of a strong conviction that now when the assessee had came forth with the full disclosure of all the particulars in respect of its aforesaid claim of expense, which as observed by us hereinabove had not been proved to be incorrect by the lower authorities, therefore, merely for the reason that the addition/disallowance on the said count had not been assailed by the assessee in its quantum appeal before the Tribunal would not justify imposition of penalty under Sec. 271(1)(c) on the assessee on the said standalone basis. Our aforesaid view is fortified from the fact that the penalty proceedings are separate and distinct from the assessment proceedings, and merely for the reason that an addition/disallowance had been made in the hands of the assessee would not justify imposition of penalty u/s 271(1)(c). ITAT have given a thoughtful consideration to the observations of the CIT(A) that as the assessee had raised a bonafide claim of expense as regards the coal cost freight issue-Bhusaval in its revised return of income, therefore, no penalty under Sec.271(1)(c) could have been levied on it, and in the backdrop of our aforesaid deliberations find ourselves to be in agreement with the view taken by him. Accordingly, finding no infirmity in the order of the CIT(A) wherein he had rightly vacated the penalty imposed by the A.O under Sec.271(1)(c), ITAT uphold the same.
Hence, the appeal of the revenue is dismissed.
FULL TEXT OF THE ITAT JUDGEMENT
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