Indian Kanoon - Search engine for Indian Law

This appeal preferred by the Revenue is directed against the order dated 21.10.2009 passed by the learned CIT(A) for the Assessment Year 2003-04 cancelling the penalty of ` 11,41,910/- imposed by the Assessing Officer u/s.271(1)(c) of the Income Tax Act, 1961 (the Act).

2. Briefly stated facts of the case are that the assessee company derives income from brokerage, interest, annual fees and dividend. The return of income was filed declaring a loss of ` 5,42,676/-. During the course of assessment proceedings the Assessing Officer made various disallowances including the disallowance of depreciation on computer software ` 3,90,000/-, unexplained cash credit u/s.68 ` 24,81,078/- and ` 2,38,087/-, prior period expenses ` 4,58,910/- and disallowance SEBI fees ` 19,24,286/-. The Assessing Officer after setting off the brought forward depreciation and business loss to the extent of ` 49,49,685/- completed assessment at Nil income vide order dated 30.12.2005 passed u/s.143(3) of the Act. The Assessing Officer while completing the assessment also initiated penalty proceedings u/s.271(1)(c) of the Act. In response to notice to show cause as to why penalty u/s.271(1)(c) should not be imposed, it was interalia submitted by the assessee that the assessee has filed complete particulars and the claim was made by the assessee in good faith with no intention to conceal the facts and the income of the assessee therefore, penalty is not leviable. However, the Assessing Officer after considering the assessee's reply and relying on the decision in the case of Union of India & Ors. Vs. Dharmendra Textiles Process & Ors (2008) 14 DTR 114 (SC) held that the assessee has filed inaccurate particulars of its income on the three issues therefore it is a fit case of levy penalty and accordingly he imposed penalty of ` 11,41,910/- vide order dated 30.03.2009 passed u/s.271(1)(c) of the Act.