KLIN INDUSTRIES,SANDHA KHAMIDANA, JUNAGADH vs. THE ACIT, CIRCLE, JUNAGADH, JUNAGADH

Since, all three appeals relate to the same assessee and identical facts and issue are involved; therefore, all these appeals have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity.

At the outset, Ld. Counsel for the assessee submitted that appeal of the assessee in ITA No.862/Rjt/2025, for assessment year (A.Y.) 2014-15, has already been adjudicated by the ITAT- Rajkot, Bench in ITA No.857/Rjt/2025 for A.Y. 2014-15 vide order dated 15.01.2026, wherein Tribunal held as follows: “10. On identical facts, I also rely on the judgement of Hon'ble Bombay High Court in the case of Mohd. Farhan A Shaikh vs. Deputy Commissioner of Income-tax, Central Circle-1, Belgaum [2021] 125 taxmann.com 253 (Bom)/[2021] wherein the penalty u/s 271(1)(c) was deleted on account of defective penalty notice u/s 271(1)(c) of the Act. The Hon'ble Bombay High Court held that assessment order clearly records satisfaction for imposing penalty on one or other, or both grounds mentioned in section 271(1)(c), a mere defect in notice not striking off irrelevant matter would vitiate penalty proceedings. Considering these facts, and the precedents applicable to these facts, I am of the view that penalty should not be imposed on the assessee. Accordingly, I delete the penalty u/s 271(1)(c) of the Act, and allow the appeal of the assessee. 11. Since, I have deleted the penalty, based on the technical ground, “being notice under section 271(1) (c ) of the Act defective”, therefore, other arguments advanced by the learned Counsel for the assessee, on merit of the case, rendered academic and infructuous hence, do not require adjudication.”

Since, the Tribunal has allowed the appeal of the assessee and deleted the penalty for assessment year (A.Y.) 2014-15, vide ITA No.857/Rjt/2025, in the assessee’s case (Klin Industries vs. ACIT), vide order dated 15.01.2026, wherein penalty has been deleted by this Tribunal, therefore, the appeal filed by the assessee in ITA No.862/Rjt/2025 for A.Y. 2014-15 is just a duplication. Therefore, this appeal of the assessee in ITA No.862/Rjt/2025 for A.Y. 2014-15 should be treated as withdrawn by the assessee, as the assessee has already been given benefit by this Tribunal. Hence, this appeal is treated as a duplication and therefore, the same is dismissed, as withdrawn.

Now, coming to the assessee’s appeals in ITA Nos. 863/Rjt/2025 for A.Y. 2016-17 & ITA No.858/Rjt/2025 for A.Y. 2016-17.

Grounds of appeal raised by the assessee in ITA Nos. 858 & 863/Rjt/2025 for A.Y. 2016-17, are similar and identical, which are reproduced below:

Aggrieved by the order of the assessing officer, the assessed carried the matter in appeal before the ld. CIT(A), who has also confirmed the addition made by the assessing officer, therefore, the assessee is in further appeal before this Tribunal. The Ld. Counsel for the assessee submitted that in case of these two appeals, the assessee has paid the entire demand raised by the assessing officer in respect of various additions made by the assessing officer during the assessment proceedings. Since the entire taxes have been paid by the assessee on the various additions made by the assessing officer, and therefore, the assessee did not file appeal in respect of quantum proceedings before the ld.CIT(A), pertaining to A.Y. 2016-17. Therefore, the penalty imposed on the assessee should be deleted, as the assessee had paid the entire tax and entire demand raised by the assessing officer. Moreover, the Ld. Counsel for the assessee submitted that in the assessee’s case for A.Y. 2014-15, the penalty had already been deleted by this Tribunal, on identical facts. Therefore, the penalty imposed by the assessing officer u/s.271(1)(c) of the Act in both the appeals should also be deleted.

On the other hand, Ld. DR for the Revenue relied on the findings of the assessing officer.

I have heard the Learned Counsel appearing on behalf of the respective parties at length. I note that in these two appeals, the assessee has explained reasonable cause not to impose the penalty. In fact, the assessee has deposited the entire tax and demand raised by the assessing officer, in the quantum proceedings. Since, in the quantum proceedings, the assessee has admitted and paid the entire tax to buy the peace of mind and therefore, the penalty should not be imposed as per Ld. Counsel for the assessee. I have also gone through the facts of the assessee’s case and noted that assessee had paid the entire demand raised by the assessing officer in the quantum proceedings, however, did not file the appeal before the learned CIT (A), in quantum proceedings.

I also note that full and true disclosure has been made in ITR and in Audit Report and at the time of scrutiny assessment u/s 143(3) of the Act. The ITR is filed on 12.10.2016 declaring Gross Income Rs. 35,76,828/- and deduction claimed u/s 80JJA of Rs. 35.76 Lakh and declared total income Rs. NIL.The Return of Income is accompanied by Audit Report u/s 44AB of the Act. The AMT Rs. 6,77,255/- paid immediately and not claimed in ITR. All the particulars required to calculate the AMT was disclosed before the assessing officer. The AMT is calculated u/s 143(3) of the Act, solely based on the figures already disclosed and nothing is concealed by the assessee. It is unintentional, inadvertent and Bonafide mistake of tax calculation. It is neither concealment of income nor deliberate furnishing of inaccurate particulars of income by the assessee. Therefore, I note that every disallowance cannot be automatically penalised. The Co-ordinate Bench of ITAT Ahmedabad in the case of INDIAN CHRONICLE LTD. V. ITO (Ahd -Trib.) 2024 ITL 6182 , held that:

The Hon’ble Supreme Court in the case of CIT v. Reliance petroproducts (P) Ltd. (2010) 322 ITR 158 (SC) held that bonafide claim/deduction disallowed by the assessing officer cannot automatically penalised u/s 271(1)(C) of the Act. The Hon’ble Supreme Court in the case of Price Waterhouse Coopers Pvt. Ltd. v. CIT (2012) 348 ITR 306 (SC) held that Penalty should be deleted where a computational error occurred due to an oversight, and the facts were fully disclosed. Therefore, I find that the assessee has explained the sufficient cause stating that penalty u/s.271(1)(c) of the Act should not be imposed and these penalties are merely on certain adjustments made by the assessing officer and hence, there is no any conscious concealment of income, on the part of the assessee. I find that facts remained same in ITA No.863/Rjt/2025, which is akin to facts mentioned in ITA No.858/Rjt/2025, therefore, penalties imposed by the assessing officer in both appeals of the assessee should be deleted. Accordingly, I delete both penalties under section 271(1) (c ) of the Act, and allow both the appeals of the assessee.

In the combined result, both the appeals filed by the assessee in ITA Nos. 858 & 863/Rjt/2025, are allowed and assessee’s appeal in ITA No.862/Rjt/2025 for A.Y. 2014-15 is dismissed as withdrawn.