Section 37, 271 of Income Tax Act, 1961—In the instant case, revenue preferred the appeal against the order of CIT on the following grounds—
whether the CIT(A) was justified in deleting the penalty levied u/s.271(1)(c) following the decision of the ITAT in assessee's case for A.Y.2010-11 ignoring the fact that additional sugarcane price paid over and above the purchase price fixed by the Government is nothing but appropriation of profit which is liable to be disallowed as business expenditure?

Whether the CIT(A) was justified in allowing the claim of expenditure pertaining to earlier year ignoring the facts as the assessee has been following the mercantile system of accountancy?

Held that—In absence of any contrary material, we do not find any infirmity in the order of Commissioner of Income Tax (Appeals) in deleting levy of penalty by following the order of Tribunal in assessee’s own case for earlier assessment year. Accordingly, the impugned order is upheld and appeal of the Revenue for assessment year 2010-11 is dismissed.

Also the manner in which penalty proceedings u/s.271(1)(c) have been initiated, are ambiguous. In assessment order dated 25.03.2013 while initiating penalty proceedings, the Assessing Officer has recorded satisfaction u/s.271(1)(c) without specifying charge for levy of penalty. However, while levying penalty, the Assessing Officer concluded that the assessee furnished inaccurate particulars of income, therefore, provisions of section 271(1)(c) are attracted. The manner in which satisfaction for initiating penalty u/s.271(1)(c) has been recorded suffers from ambiguity and vagueness. Therefore, penalty levied u/s.271(1) (c) of the Act is liable to be deleted on this account as well. - Decided in favor of assessee.

CIT (Appeals) granted relief to the assessee by following the order of Tribunal in assessee’s own case in assessment year 2010-11 as followed the decision of Exxon Mobil Lubricants (P) Ltd. [2010 (9) TMI 36 - DELHI HIGH COURT]. DR has neither brought to our notice any contrary decision nor the ld. DR has pointed any difference between the nature of transaction in the assessment year under appeal and the assessment year 2010-11 for which the Tribunal has granted relief to the assessee. We do not find any error in the order of First Appellate Authority in allowing the appeal of assessee - Decided against revenue.[THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, KOLHAPUR. VERSUS ECO CANE ENERGY LTD.] [2018] [7] [ITCD Online] [79] [ITAT PUNE]