| The Tax Publishers2019 TaxPub(DT) 3591 (Mad-HC) INCOME TAX ACT, 1961
Section 271(1)(c) read with Section 41(1) and Section 69A
Where AO made addition to assessee's income by invoking provisions of sections 69A and 41(1), and also imposed penalty under section 271(1)(c), considering plausible explanation furnished by assessee against aforesaid additions, which required an investigation and inquiry, penalty order was passed in mechanical manner and was set aside.
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Penalty under section 271(1)(c) - Imposition of penalty in mechanical manner - Additions made required investigation and enquiry on part of lower revenue authorities -
AO made addition to assessee's income in respect of unvouched expenses and unexplained credits in terms of sectionS 69A and 41(1). AO imposed penalty under section 271(1)(c). Held: Assessee contended that, expenses were un-vouched as it was acting as clearing and forwarding agent and, expenses were incurred on behalf of customers which were to be reimbursed by customers. According to assessee, said expenses were not even claimed as deduction in profit and loss account. So far as, unexplained credit was concerned, assessee's case was that said amount came into existence as there were certain discrepancies in tallying account balances of some of sundry creditors. On facts, assessee furnished a plausible explanation, which required an investigation and inquiry. Since, instead of undertaking such fair exercise, revenue imposed penalty under section 271(1)(c) in a mechanical manner, same could not be sustained.
REFERRED : KP Madhusudanan v. CIT (2001) 251 ITR 99 (SC) : 2001 TaxPub(DT) 1585 (SC) CIT v. Dharamchand L. Shah (1993) 204 ITR 462 (Bom) : 1993 TaxPub(DT) 1198 (Bom-HC) CIT v. PM Shah (1993) 203 ITR 792 (Bom) : 1993 TaxPub(DT) 0850 (Bom-HC)
FAVOUR : In assessee's favour
A.Y. : 2000-01 to 2005-06
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