ACIT, COIMBATORE vs. MAGNA ELECTRO CASTINGS LIMITED, COIMBATORE

The appeal has been filed with the delay of 56 days. The Revenue has filed affidavit of P. Vimalraj, Assistant Commissioner of Income TAx, Coimbatore explaining delay in filing of the appeal. The ld. Authorised Representative of the assessee has not raised any serious objection in condoning delay. After perusal of the reasons stated in affidavit, we are satisfied that the delay in filing of appeal is not intentional or deliberate. The delay of 56 days in filing of the appeal is condoned and the appeal is admitted to be heard on merits.

The assessee is a company registered under the provisions of Companies Act, 1956 and is engaged in the business of manufacturing of iron castings and generation of power through windmill. During the course of assessment proceedings, the Assessing Officer disallowed expenditure to the tune of � 12,00,000/- claimed u/.37 of the Act towards payment made to M/s. Samrajyaa & Company. The Assistant Commissioner of Income Tax vide order dated 30.03.2012 levied penalty of �4,03,920/- u/s. 271(1)(c) of The Act. Aggrieved by the penalty order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income I.T.A.No.1797 /Mds/2013 :- 3 -: .

Tax (Appeals) vide impugned order deleted the penalty and allowed the appeal of the assessee. The Revenue has come in appeal before the Tribunal assailing the order of First Appellate Authority.

Shri. P. Radhakrishnan, representing the Department vehemently defended the penalty order dated 30.03.2012. The ld. Departmental Representative (DR) submitted that the assessee had not disclosed full details of the transaction during the course of assessment. It was only during the course of physical verification it transpired that the assessee company had paid power charges in respect of CNC machines owned by M/s. Samrajyaa & Company, which is roughly �1,00,000/- per month. He further pointed that the partners of the said firm are closely related to the directors of the assessee company. The ld. DR prayed for setting aside the impugned order.

Contradicting the submissions, Shri. K. Raghu, appearing on behalf of the assessee, vehemently supported the impugned order.

We have heard the submissions made by the representatives of both sides and have perused the orders of the authorities below. From the perusal of records, we observed that addition in the hands of the assessee was made on estimation. The co-ordinate bench of the Tribunal in has deleted the addition made by the Assessing Officer and has remanded the file back to the Assessing Officer for fresh examination of the issue. The penalty u/s.271(1) (c) has been levied on the addition, that has been deleted by the Tribunal. Once the substratum of penalty has been set aside, the penalty will not survive. Accordingly, the penalty has to be deleted. We do not find any merit in the appeal of the Revenue, the same is dismissed.