M/S SUNBEAM HOTELS (P) LTD.,CHANDIGARH vs. ACIT, CHANDIGARH

3144 3dieir 3fed7ur; qosha1a =yrydio, #" qosara IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B' CHANDIGARH f0 &. 44, 341848 gaxf zj4 *f, 7fyd 44 BEFORE SHRI N.K. SAINI, VICE PRESIDENT & SHRI S.S.GODARA, JUDICIAL MEMBER 3Rahr3rdlcTH /ITA No. 784/CHD/2 011 feujay Assessment Year 2006-07 M/s Sunbeam Hotels (P) Ltd. Vs . The ACIT, SCO 1054-61, Sector 22-B, Taa Circle 3(1) Chandigarh Chandigarh FuriawTr_ /PAN NO: AACCSOO02K 3dtareff/Appellant Azef/Respondent Hearing through video Conferencing @ua1d513/Assessee by {TJTae31H/ Revenue by Sh: Parikshit Aggarwal, CA Smt. Geetinder Mann, Addl CIT Tar-/Date of Hearing 33u4uIFITRT/Date of Pronouncement 02.11.2020 6l 1-044 3ae/Order Per SSGodara_JMi The assessee's appeal for assessment year 2006-07 arises against the Commissioner of Income Tax (Appeals), Chandigarh order dated 21.3.2011 passed in case No_ 110/P/09-10 affirming the Assessing Officer' $ action imposing penalty of Rs . 3,19,770/- vide order dated 26.6.2009 invoking the proceedings uls 271 (1)(c) of the Income Tax Act, 1961 (in short 'the Act')_ Heard both the parties. ITA No. 784-Chd-2011- Sunbeam Hotels (P) Ltd, Chandigarh 2 The assessee' S detailed paper book's forming part of the case record stands perused. 2 With the able assistance of both the parties, we noticed that the assessee S instant appeal suffers 57 days delay in filing: The Ld. counsel invited our attention to the assessee' S detailed condonation petition dated 31.10.2020 inter alia pleading therein that its two directors brothers have been involved in the corresponding proceedings before the Company Law Board (CLB) later on redesignated as National Company Law Tribunal (NCLT) since year 2010 which case was settled only in the year 2019_ The assessee' S case accordingly is that the impugned 57 days delay is neither intentional nor deliberate but on account of pendency of the said proceedings under Company law. 3 _ AlL these clinching facts remained un-rebutted from the Revenue side. 4 We observe in this backdrop of facts that the assessee S above stated delay of 57 days in filing the instant appeal deserves to be condoned for the said precise reason only We order accordingly. 5 . Coming to the correctness of the impugned section 271 (1)(c) penalty proceedings to the tune of Rs. 3,19,770/-, we notice that the same pertains to disallowance of the advance payments made to the assessee' $ directors to the tune of Rs. 9,50,000/- under the simprest" ITA No. 784-Chd-2011- Sunbeam Hotels (P) Ltd, Chandigarh 3 account for meeting day to day cash requirements. The Assessing Officer' s quantum assessment order dated 16.12.2008 suggests that assessee had failed to place on record the corresponding bills /vouchers of imprest etc. except few (para 3 of the assessment order)_ This made the Assessing Officer to invoke corresponding quantum disallowance in the above stated assessment order. The assessee appears to have explained the same since it did not carry the issue in any further appeal. The quantum proceedings attained finality at this stage itself: The Assessing Officer thereafter resumed with the impugned penalty proceedings. The assessee filed its reply dated 17.6.2009 inter alia stating therein that its failure to place on record the corresponding imprest expenses claimed in the corresponding business income was only to buy peace of mind and to avoid prolonged litigation. It further pleaded that there was no element of furnishing of inaccurate particulars as was the Assessing Officer' $ case during the course of assessment. It was thus a mere failure on the former' s part to substantiate the impugned expenses_ The Assessing Officer was of the view that the assessee' $ act and conduct in claiming advances made imprest account clearly made it out a case of furnishing of inaccurate particulars of income under the latter limb of section 271 (1)(c) of the Act. He, thus, imposed the impugned penalty amounting to Rs _ 3,19,770/- and ITA No. 784-Chd-2011- Sunbeam Hotels (P) Ltd, Chandigarh Assessing Officer order was confirmed in the CIT(A) order under challenge. 6 We have given our thoughtful consideration against and in support of the impugned penalty_ The assessee S paper book containing Assessing Officer S penalty show cause notice dated 16.12.2005 , its reply 16.12.2005, balance sheet of the impugned assessment order, relevant ledger of imprest account pertaining to both the directors as well as Hon'ble Apex Court decision in Basir Ahmed Sidodiya vs ITO (2020) 424 ITR 1 (SC) stands perused_ As it has already come on record, even the Assessing Officer has been fair enough in not disputing the clinching fact that the assessee had at least placed on record some of the expenses and voucher'$ pertaining to the impugned account advances made to its two directors to the tune of Rs_ 9,50,000/- meaning thereby that we are dealing with a instance wherein although the assessee had claimed impugned advances as business expenditure after actual payment to its directors followed by corresponding debit entries and cash credited in favour of the recipients, since we are dealing with a pair company, we are of the opinion that it had very much valid reason to claim corresponding expenses to be followed by necessary confirmation com ling from the latter' s end, Hon'ble Apex court landmark decision in the case of CIT vs Reliance Petro Products 322 ITR 158 (SC) already settled law that the quantum ITA No. 784-Chd-2011- Sunbeam Hotels (P) Ltd, Chandigarh 5 and penalty proceedings are independent in nature wherein each and every disallowance addition made in case of former does not ipso facto not attract later penalty provision. 7 We keeping in mind the same note that both the Ld. lower authorities have erred in law in fact in treating the assessee instant impugned claim of Rs . 9,50,000/- as an instance of furnishing of inaccurate particulars of income attracting section 271 (1)(c) penalty proceedings. We accordingly delete the penalty under challenge in the instant The assessee S sole and substantive grievance canvassed in the case. instant appeal stands accepted. The assessee' $ appeal is allowed: Order pronounced in the Open Court on OL-22ex1 Salur Sit-&bx Lfs.s: GODARA) 71+er4/ Judicial Member (NK SAIND) 341848 [Vice President Dated 0| "3R.&,' ITA No. 784-Chd-2011- Sunbeam Hotels (P) Ltd, Chandigarh 6 31a9r-f191alfalfyzralfral Copy of the order forwarded to 1 3dlcreffi The Appellant 2. 9rreffi The Respondent 3_ 3144731I+a/ CIT 4 3T49<311a (3dlay The CIT(A) 5. @tnNyiaff, 3roror-inziearvur, Toz1a/ DR, ITAT; CHANDIGARH 6. 734T3a1/ Guard File 34R1ITHR/ By order; 7ET4a4JTI Assistant Registrar '; 41 70 '