M/S. STERLING GREENWOOD LTD.,,AHMEDABAD vs. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE-4(1)(1),, AHMEDABAD

This appeal by the Assessee is directed against the order of the Ld. CIT(A)-8, Ahmedabad dated 26.07.2016 pertaining to A.Y. 2010-11.

The roots for the levy of penalty lie in the assessment order dated 16.11.2012 framed u/s. 143(3) of the Act.

The returned income of the assessee amounting to Rs. 61,38,260/- was assessed at Rs. 78,24,590/- after making the following additions/disallwonces:- (i) Disallowance of gratuity Rs. 1,04,150/- (ii) Disallowance of dividend Rs. 1,56,006/- (iii) Disallowance of contribution to PF/ESIC Rs. 2,48,859/- (iv) Disallowance out of sundry balances written off Rs. 11,77,323/-

Penalty proceedings were separately initiated.

The only disallowance agitated by the assessee before the First Appellate Authority was on account of contribution to PF/ESIC amounting to Rs. 2,48,859/-. The other disallowances were never contested before the First Appellate Authority. The disallowance contested before the FAA was deleted by him vide order dated 23.09.2013.

The only disallowances survived as not agitated in quantum proceedings related to gratuity, dividend and sundry balances written off.

We find that the gratuity was added on account of the adverse observation made by the auditors in the audit report. The dividend was claimed as exempt being received from Rajkot Nagrik Co-Operative Bank Ltd. and the sundry

A thoughtful consideration to the factual matrix relating to these disallowances show that there was no particular which can be termed as filing of inaccurate particulars nor there is any element of concealment of any income. In our understanding of the facts and the law, we do not find this to be a fit case for the levy of penalty u/s. 271(1(c) of the Act. We accordingly set aside the findings of the ld. CIT(A) and direct the A.O. to delete the penalty so levied u/s. 271(1)(c) of the Act.

Appeal filed by the Assessee is allowed.