NKCM SPINNERS PRIVATE LTD,ERODE vs. ACIT, CIRCLE-1,, ERODE

आदेश / O R D E R

PER G. MANJUNATHA, ACCOUNTANT MEMBER:

This appeal filed by the assessee is directed against the order of the

Commissioner of Income Tax (Appeals), National Faceless Appeal Centre,

Delhi, dated 18.11.2021 and pertains to assessment year 2013-14.

1) The order of the learned CIT(A) is bad and erroneous in law and against the principles of natural justice. 2) The learned CIT(A) erred in not considering the fact that the Assessing officer, hurriedly, passed the order levying penalty, despite availability of time as per proviso to Sec.275(1)(a) of the Act, besides interpreting the section 275 to suit his convenience. [para- 4,page-4 of the impugned order] 3) The learned CIT(A) erred in not considering all the submissions with regard to penalty on estimated addition, despite repeating the written submissions TWICE in the impugned order, making it allegedly a speaking order, though factually wrong.

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4) The learned CIT(A) erred in not considering the fact that the order levying penalty require stands to be cancelled, for the very restriction of disallowance of commission by the CIT(A) was only on ·estimate basis and not on furnishing of inaccurate particulars, which, again was omitted to be considered by the First Appellate Authority, for reasons known to him only. And for other grounds of appeal that may be adduced at the time of hearing, the appellant prays that the appeal be considered and justice be rendered.

business of spinning and windmill, filed its return of income for the AY 2013-

14 on 30.11.2013 declaring total income at Rs.2,16,21,050/-. The

assessment has been completed u/s.143(3) of the Act, on 28.03.2016 and

determined total income at Rs.3,26,75,310/- by making additions towards

disallowance of commission expenses of Rs.99,84,636/- out of total

commission expenses claimed by the assessee at Rs.1,18,32,182/- on the

ground that the assessee could not substantiate commission payment to

various persons except filing TDS particulars, confirmation letters from the

parties. The assessee carried the matter in appeal before the First

Appellate Authority and the Ld.CIT(A) for the reasons stated in his appellate

order made adhoc disallowance @ 15% of the total commission expenses

claimed by the assessee amounting to Rs.17,74,922/- out of total

disallowance worked bout by the AO at Rs.99,84,636/-. Thereafter, the AO

initiated penalty proceedings u/s.271(1)(c) of the Act, and after considering

the relevant submissions of the assessee, levied penalty of Rs.5,75,874/-

which is 100% of the tax sought to be evaded on disallowance of

commission expenses.

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appeal before the Ld.CIT(A). Before the Ld.CIT(A), the assessee challenged

the penalty order passed by the AO on the issue of limitation as per the

provisions of Sec.275(1) of the Act. The assessee had also challenged

penalty levied on adhoc disallowance of commission expenses on the

ground that the AO failed to make out a case of concealment of particulars

of income and furnished inaccurate particulars of income. The Ld.CIT(A)

rejected the legal ground taken by the assessee challenging penalty order

passed by the AO on limitation issue by holding that the penalty order

passed by the AO is within the time allowed under the Act. However, not

adjudicated the grounds raised by the assessee, as challenged penalty

levied u/s.271(1)(c) of the Act, on estimated disallowance of commission

expenses. Aggrieved by the order of the Ld.CIT(A), the assessee is in

appeal before us.

not adjudicating the specific ground taken by the assessee challenging levy

of penalty on estimated on disallowance of commission expenses, even

though, the assessee has taken a specific ground before the Ld.CIT(A).

submitted that the assessee has challenged penalty order passed by the

AO on limitation as well as on merits, but the Ld.CIT(A) has decided the

issue on limitation but not on merits. Therefore, the issue may be set aside

to the file of the Ld.CIT(A).

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record including grounds of appeal raised by the assessee before us and

grounds of appeal taken by the assessee before the Ld.CIT(A). We find that

although, the assessee has taken specific grounds of appeal on merits of

the issue in levying penalty u/s.271(1)(c) of the Act, on adhoc disallowance

of commission expenses, but the Ld.CIT(A) had failed to adjudicate the

issue on merits. Therefore, we are of the considered view that the issue

needs to be go back to the file of the Ld.CIT(A) to decide the issue of levy

of penalty u/s.271(1)(c) of the Act, on merits with reference to the specific

grounds raised by the assessee. Hence, we set aside the appeal to the file

of the Ld.CIT(A) and direct the Ld.CIT(A) to decide the issue of penalty

levied u/s.271(1)(c) of the Act, on merits.

Sd/- Sd/- (महावीर िसंह) (जी. मंजूनाथा) (G. MANJUNATHA) (MAHAVIR SINGH) उपा�� /VICE PRESIDENT लेखा सद�य/ACCOUNTANT MEMBER

चे�ई/Chennai, �दनांक/Dated: 29th July, 2022. TLN आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 4. आयकर आयु�/CIT 2. ��यथ�/Respondent 5. िवभागीय �ितिनिध/DR 3. आयकर आयु� (अपील)/CIT(A) 6. गाड� फाईल/GF