INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Disallowance of promotion expenses - Addition on which penalty was levied was already deleted by Tribunal -

Assessee was engaged in the business of marketing and trading of dermatology products. AO made addition towards sales promotion expenses being freebies and sponsorship given to doctors and marketing personnel. Thereafter, AO initiated penalty proceedings under section 271(1)(c) and after considering relevant submissions of assessee had levied penalty on account of furnishing inaccurate particulars of income. Assessee submitted that penalty levied by AO under section 271(1)(c) cannot survive, because the additions made AO was finally deleted by the ITAT, vide its Order, dated 2-4-2018 for assessment year 2011-12 and vide Order, dated 31-5-2018 for assessment year 2012-13. Held: Tribunal in case of [[I.T.A. No.80/Mum/2016, ITA. No. 138/Mum/2016, dt. 2-4-2018]] had deleted additions made by AO towards sales promotion expense, in light of circular issued by the CBDT, on the basis of MCI regulations. Once addition on which penalty levied under section 271(1)(c) has been finally deleted by the appellate authorities, then there was nothing survived to levy penalty under section 271(1)(c). CIT(A) after considering relevant facts and also, by taken note of facts that the Tribunal had deleted additions made by AO, which triggered levy of penalty of under section 271(1)(c) had deleted penalty levied on such additions, penalty under section 271(1)(c) was to be deleted.

Followed:Galderma India Pvt. Ltd. v. DCIT [ITA No.1139/Mum/2016, ITA No.1524/Mum/2016, dt. 31-5-2018] ACIT v. Galderma India Pvt. Ltd. [I.T.A. No.80/Mum/2016, ITA. No. 138/Mum/2016, dt. 2-4-2018]

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2011-12 & 2012-13

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