DANI SHARES & STOCK P.LTD,MUMBAI vs. ITO 4(1)(1), MUMBAI

This appeal filed by assessee against the order of CIT (A)-8, Mumbai dated 01.03.2012 for AY 2002 -03. The assessee is aggrieved by the order of confirming the penalty order u/s. 271(1) (c) of the Act.

The brief facts of the case are that the assessee filed its return of income for relevant AY on 31.10.2002. The assessment was completed u/s 143(3) of the Act on 15.02.2005. While framing assessment order the Assessing Officer (AO) made as many as 12 additions/disallowances. Aggrieved by the order of AO on the quantum assessment the assessee filed appeal before CIT (A), wherein his appeal was partly allowed. The assessee further filed second appeal before Tribunal. After receipt of order of first appeal from CIT (A), the AO issued a notice u/s 271 r.w.s. 274 of the Act, vide notice dated 12.02.2008. Notice of initiation of penalty was contested by the assessee by filing reply vide reply dated 25.02.2008. The reply of assessee was not accepted by AO. The AO levied the penalty of Rs.8,37,360/- vide order dated 27/03/2008. Aggrieved by the order of levy of penalty the assessee filed appeal before the CIT (A), wherein CIT (A) deleted the penalty except with regard to the disallowance of medical expanses of Rs,12,78,000/- and claim of donation of Rs.16,042/- Further aggrieved by the order of CIT (A) the assessee filed the present appeal before us.

We have heard Authorised Representative (AR) of assessee and Departmental Representative (DR) for revenue and perused the material available on record. AR of the assessee argued that AO has not specified on which additions/ disallowance the penalty was initiated in the assessment order. The notice issued to the assessee u/s 271(1) (c) r.w.s. 274 of the Act, also does not specify under which charge the penalty is being initiated. The conclusion of concealment of income was opined first time only in the order of penalty u/s 271(1) (c) of the Act. In the quantum appeal before Tribunal the assessee filed additional evidence which was accepted, and the matter was restored to the file of CIT(A) with the direction to decide the appeal after admitting the additional evidences. The Ld. CIT(A) granted substantial relief to the assessee and deleted most the additions, however the disallowance of donation was confined to Rs.600/-, disallowance of foreign was confined to 10% and sustained the addition of Medical Expenses. The assessee further file appeal to the Tribunal in but the same was dismissed vide order dated03/12/2015. Ld. AR for assessee further argued that mere disallowance of claim will not attract the initiation of penalty when the assessee disclosed all the particulars in the return of income and relied on the decisions of Bombay High Court in CIT Vs. SM Construction in ITA No. 412of 2013 dated 03.03.2015, DIT Vs Admn. Of Estate of Late E F Dinshaw (2013) taxmann.com 95(Bom), decision of ITAT Mumbai in Bannett Colemen &Co Ltd Vs ACIT 144 ITD 459 and Karnataka High Court in CIT Vs Manjunatha Cotton and ginning Factory 369 ITR565(Karn) DR for the Revenue strongly supported the orders of authorities below and argued that notice was not challenged either before AO or CIT(A), moreover, there was a multiple reasons for initiating the penalty on number of additions in the assessment order. In the rejoinder ld AR for assessee argued that assessee objected before the CIT(A) and filed and written objection before the CIT(A) vide letter dated 09.02.2011 (page 36 & 37 of PB).