Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: HON’BLE KUL BHARAT & HON’BLE MANISH BORAD, ACCOUNTANT
the orders of Ld. Commissioner of Income Tax-II (in short ‘Ld. CIT], Indore dated 09.07.2017 which is arising out of the order u/s Abdul Rehman 271(1)(c) of the Income Tax Act 1961(In short the ‘Act’) dated 31.05.2017 framed by ACIT-4(1), Bhopal.
2. Assessee has raised following grounds of appeal:-
1.CIT(A)-II, Bhopal has passed the appellate order imposing penalty u/s 271(1)(c) of Income Tax Act, 1961 of Rs.573064/- on the grounds of concealment of income mere on the basis of opinion and shifted the onus of proof to the assessee which is unjust as the assessee was acting bonafine and had not concealed any income in the relevant assessment year.
Penalty imposed toRs.5,73,064/- under section 271(1)(c ) is requested to be deleted by your honour.
3. The appellant craves leave to add, amend, alter vary and or delete all or any of above grounds..
Brief facts of the case as culled out from the records are that the assessee is an individual engaged in the business of transport.
E-return filed on 29.11.14 declaring income of Rs.15,31,266/-.
Case selected for scrutiny through CASS followed by serving of statutory notices. Assessment completed u/s 143(3) of the Act on 25.11.2016 after making addition towards disallowance of transport expenses at Rs.18,54,576/- thereby assessing the income at Rs.33,85,842/-,
Penalty proceedings were initiated u/s 271(1)(c) of the Act for furnishing inaccurate particulars of income. Subsequently penalty proceedings were carried out during which assessee submitted that the penalty should not be levied on adhoc disallowance. Ld. A.O was not satisfied and he levied the penalty at Rs.5,73,064/- u/s 271(1)(c) of the Act. Aggrieved assessee preferred appeal before Ld. CIT(A) but failed to succeed.
Now the assessee is in appeal before the Tribunal.
Ld. Counsel for the assessee took us through the paper book running from page no. 1 to 36 and also the paper book of case laws filed in support of the contention that the Ld. A.O was not justified in levying the penalty. Ld. Counsel for the assessee also submitted that the addition on which the penalty have been levied is in the nature of adhoc disallowance on which the penalty was not warranted.
Per contra Ld. Departmental Representative supported the orders of both the lower authorities.
We have heard rival contentions and perused the records placed before us. Assessee’s sole issue is against the levy of penalty at Rs.5,73,064/- by the Ld. A.O and confirmed by Ld. CIT(A). This penalty was levied on disallowance of transport expenses on 18,54,576/-.
We find that assessee paid transport charges to various vendors. Ld. A.O pointed out that the transport charges paid to M/s Kosar Transport Company are in cash and payment for each day is Rs.35,000/- and no payments were made through cheque.
In para 3.2 of the assessment order dated 25.11.2016 Ld. A.O has computed the disallowance observing that since the payments on transport charges at Rs.1,23,63,840/- are made in cash during the year they are doubted and fail the test of comparison of the assessee’s payment of similar type of expenses to other vendors.
Raising this doubt Ld. A.O made adhoc disallowance @15% of Rs.1,23,63,850/- and disallowed Rs.18,54,576/-.
On going through the above observation of the Ld. A.O we find that the disallowance is adhoc in nature. Ld. A.O has not doubted the genuineness of the transport charges paid to M/s Kosar 4 Abdul Rehman Transport Company by bringing any adverse material on record.
Penalty u/s 271(1)(c) of the Act is levied for concealment of income or furnishing the inaccurate particulars of income. In the present case penalty has been levied by the Ld. A.O for furnishing the inaccurate particulars of income but nowhere from the assessment order or the penalty order is discernable that what type of particulars have been filed incorrectly by the assessee. No efforts were made by the Ld. A.O during the course of assessment proceedings to examine the genuineness of the transaction of transport charges paid by the assessee to M/s Kosar Transport Company. Just because the payments were made in cash cannot be a basis to doubt the genuineness of the expenditure. Since the disallowance are made on adhoc basis by applying the rate of 15%, holding the assessee liable to pay penalty for furnishing inaccurate particulars of income cannot be held to be justified.
We therefore in the given facts and circumstances of the case set aside the finding of Ld. CIT(A) and delete the penalty levied u/s 271(1)(c) of the Act at Rs.5,73,064/-. Ground No.1&2 of the assessee’s appeal are allowed.
Ground No.3 is general in nature which needs no adjudication.
In the result appeal of the assessee is allowed.
Order was pronounced in the open court on 19 .02.2021