TOSCANA LASTS LTD. Vs. INCOME TAX OFFICER
LAWS(IT)-2014-5-136
INCOME TAX APPELLATE TRIBUNAL
Decided on May 12,2014

Toscana Lasts Ltd. Appellant
VERSUS
INCOME TAX OFFICER Respondents

JUDGEMENT

B.C.Meena, Member (A) - (1.) THIS appeal filed by the assessee emanates from the order of CIT(A) -XIX. New Delhi dt. 11th Aug., 2010 for the asst. yr. 2000 -01. The assessee is engaged in the business of manufacturing and sale of wooden shoe lasts, i.e., wooden pieces put in the shoes to save it from collapsing. The assessment under s. 143(3) was made on 28th Feb., 2003 and the following additions were made: The assessee filed audited accounts along with the return of income declaring total income at Rs. 2,12,05,670 which was set off against the unabsorbed depreciation and business losses of earlier years. The total business loss of Rs. 2,27,88,104 and unabsorbed depreciation of Rs. 7,27,38,068 available with the assessee as per the return of income filed. The AO initiated the penalty proceedings under s. 271(1)(c) and levied on 26th June, 2009. The CIT(A) confirmed the levy of penalty. Now, the assessee is in appeal before us by taking the following grounds of appeal: "1. That the learned CIT(A) has erred on facts and in law in dismissing the appeal filed by the appellant company in respect of order under s. 271(1)(c) of the Act levying penalty of Rs. 1,60,00,000.
(2.) WITHOUT prejudice to ground No. 'I' above, that the learned CIT(A) has erred on the facts and circumstances of the case in confirming the levy of penalty in respect of disallowance of payments Rs. 3,89,78,000 towards administrative charges (other than expenses relating to production and sale) made to M/s. APR Ltd., as not related to the business of the appellant company particularly when the appellant company did not have the requisite infrastructure to perform necessary administrative tasks as is evident from the assessment records of various assessment years. 2A. Without prejudice to ground No. '2' above, that the learned CIT(A), on the facts and circumstances of the case, has erred in confirming the levy of penalty without bringing on record any material to show that the administrative expenses of Rs. 3,89,78,000 did not relate to business or were expenses of personal or capital nature and hence, not allowable under s. 37 of the Act. 2B. Without prejudice to ground Nos. '2' and '2A' above, that the learned CIT(A) on the facts and circumstances of the case has erred in confirming the imposition of penalty in respect of disallowance of Rs. 3,89,78,000 without considering that no opportunity was allowed to this appellant to explain in writing why penalty should not be imposed on the aforesaid amount and the order so passed is against natural justice and deserves to be quashed. Without prejudice to ground No. 1 above, that the learned CIT(A) has erred in confirming the levy of penalty in respect of disallowances/claims for write off of unsaleable stocks Rs. 8,57,119 on the ground that such unsaleable stocks were not removed from godowns and/or such goods were not put to sale. 3A. Without prejudice to ground No. '3' above, that the learned CIT(A) has erred in confirming the penalty on surmises and conjectures without referring or bringing on record any material to show that the claim for write off of stocks of Rs. 8,57,119 was false and merely because the AO did not agree with the assessee with regard to write off of such stocks and that such disagreement tantamounted to concealment of income or furnishing of inaccurate particulars of income.
(3.) WITHOUT prejudice to ground No. 'I' above, that the learned CIT(A) has erred on facts and circumstances of the case in justifying the levy of penalty in respect of expenses amounting to Rs. 72,794 lying unpaid as on March 2003 out of claim of Rs. 3,96,801 made in accounts in the year under appeal i.e., asst. yr. 2000 -01 treating the liability as unascertained liability. The same is admissible in accordance with the mercantile system/accrual principle being followed by the appellant company. 4A. That without prejudice to ground No. '4' above, that the learned CIT(A) has erred in holding that the claim for expenses of Rs. 3,96,801 made in accounts in the asst. yr. 2000 -01 has been with the intention to reduce the year's income for the purpose of payment of tax and that the appellant company is liable to be hit within the mischief of s. 271(1)(c) without pointing out any material in support of this finding.;


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