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January 2011

S. 271(1)(c) — A mere addition made by the Assessing Officer cannot be a ground to levy penalty.

By C. N. Vaze
Shailesh Kamdar
Jagdish T. Punjabi
Bhadresh Doshi
Chartered Accountants
Reading Time 1 mins
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22. (2010) 126 ITD 416 (Ahd.)

Gruh Finance Ltd. v. ACIT

A.Y. : 1998-99. Dated : 16-5-2008

 

S. 271(1)(c) — A mere addition made by the Assessing Officer cannot be a ground to levy penalty.

Facts :

For the year under consideration, the assessee had claimed deduction u/s.36(1)(viii) to the tune of Rs.1,55,75,000. The Assessing Officer recomputed the deduction to the extent of Rs.84,24,228 and levied penalty u/s.271(1)(c).

Held :

Assessment proceedings and penalty proceedings are both different. Explanation 1 to S. 271(1)(c) states that amount added or disallowed in computing the total income shall be deemed to be income in respect of which particulars have concealed. This deeming provision is not an absolute one. The presumption is rebuttable and not conclusive. The assessee in this case has duly submitted required explanation and other documents. No material has been brought on record to show that the assessee has concealed the income or has not provided sufficient explanation. A mere addition made by the Assessing Officer cannot be a ground to levy penalty.

 

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