SUPREME COMMUNICATIONS LTD.,MUMBAI vs. ITO 7 (2) (4), MUMBAI

The present appeal has been preferred by the assessee against the order dated 28.01.2016 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2010-11.

The grounds raised

At the outset, we would like to mention that neither the assessee nor the authorised representative of the assessee appeared during to attend the hearing when the case was called up for hearing. We further notice that in the previous hearing on 03.05.2018 the assessee did not appear before the Bench and thus the case was adjourned to today. We are, therefore, disposing of the appeal after considering the merit and hearing the Ld. D.R. on the issue in absence of the assessee.

The only issue raised in the ground of appeal is against the confirmation of penalty of Rs.61,93,425/- by Ld. CIT(A) as imposed by the AO under section 271(1)(c) of the Act.

The facts in brief are that the assessment was framed under section 143(3) of the Act vide order dated 20.12.2012 making an addition to the total income of the assessee towards cessation of liability under section 41(1) amounting to Rs.1,82,21,317/- and after setting off the brought forward losses, the total income was computed at nil. Thereafter, the assessee was issued show cause notice vide letter dated 19.06.2013 as to why the penalty under section 271(1)(c) should not be imposed which was replied by the assessee by submitting that the assessee company has made one time settlement with International Asset Reconstruction Company Pvt. Ltd. (IARC) who had taken over the loan portfolio from Bank of Baroda. Under the said scheme, after obtaining no due certificate from the said company the amount which was determined to be not payable by the assessee was transferred

In the appellate proceedings, the Ld. CIT(A) dismissed the appeal of the assessee by observing that the case laws relied upon by the assessee are distinguishable on facts whereas in the present case the liability has ceased to be payable on one time settlement of the case of the assessee. The loan was borrowed by the assessee for the purpose of trading and this was duly accepted by the assessee as recorded by the AO in para 3 of the penalty order by stating that the assessee has given no objection to the addition being made under section 41(1) of the Act as the same pertained to interest component liability extinguished upon one time settlement with the IARC. We observe from the perusal of the order of Ld. CIT(A) that there is no infirmity in the said order as the same is passed after considering all the facts of the case and distinguishing the decision relied upon by the assessee. Moreover, there is no material brought before us to controverting the finding as recorded by Ld. CIT(A). We, therefore, are inclined to affirm the order of Ld. CIT(A).