ITO Vs Micro Plantea Limited (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT) Mumbai has upheld the deletion of a penalty amounting to Rs. 16,29,627/- levied against Micro Plantea Limited. The penalty, imposed under Section 271(1)(c) of the Income Tax Act, was connected to disallowances of finance expenses, operative and other expenses, depreciation, and balance written off for the Assessment Year 2007-08.
The case originated from a search action conducted under Section 132 of the Income Tax Act on September 24, 2009, against the Temptation Foods Group, leading to a notice issued to Micro Plantea Limited under Section 153C. During the subsequent assessment, the Assessing Officer (AO) disallowed various expenses totaling Rs. 52,74,136/-, resulting in a penalty. The AO justified the penalty on the grounds that the assessee did not contest the disallowances, implying concealment or furnishing of inaccurate particulars.
However, the Commissioner of Income Tax (Appeals) [CIT(A)] deleted the penalty. The CIT(A) reasoned that a penalty under Section 271(1)(c) cannot be levied solely because a disallowance was made in the assessment order. More critically, the CIT(A) noted that as a search assessment, the AO’s jurisdiction to make additions was limited to incriminating material found during the search. No such material was referenced in the assessment order to justify the disallowances.
