JASMINE INFRATECH PVT. LTD.,NEW DELHI vs. ITO WARD - 13(2), NEW DELHI

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ITA 7677/DEL/2019Status: DisposedITAT Delhi08 June 2022AY 2012-132 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that Section 69C is not applicable to expenditure recorded in earlier years and carried forward as an opening balance. Since the basis for the addition was flawed, the penalty under Section 271(1)(c) was unwarranted.

What were the facts?

The assessee challenged a penalty imposed under Section 271(1)(c) for AY 2012-13. The penalty was based on an addition of Rs. 5,20,000 for capital work in progress, which the assessee argued was not expended in the current year.

What were the issues?

Whether penalty under Section 271(1)(c) can be imposed when the addition itself is based on an incorrect application of Section 69C for brought forward capital work in progress.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 69C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “C” DELHI

Before: SHRI SAKTIJIT DEY & SHRI PRADIP KUMAR KEDIA

For Respondent: Ms. Anupama Singla, Sr.DR

PER PRADIP KUMAR KEDIA, A.M.: The captioned appeal has been filed at the instance of the assessee against the order of the Commissioner of Income Tax (Appeals)-V, New Delhi (‘CIT(A)’ in short) dated 26.06.2019 passed under Section 271(1)(c) of the Income Tax Act, 1961 (the Act) concerning AY 2012-13.

2.

As per its grounds of appeal, the assessee has challenged the imposition of penalty of Rs.1,60,680/- on quantum additions of a sum of Rs.5,20,000/- representing capital work in progress.

3.

When the matter was called for hearing, none appeared for the assessee. Accordingly, the matter was proceeded ex-parte.

4.

On perusal of the orders of the lower authorities placed on record, it is noticed that an addition of Rs.5,20,000/- on account of unexplained credit was made under Section 69C of the Act towards amount appearing under capital work in progress brought forward as a balance of the previous year. The additions were made on the ground that source of expenditure was not given. A case was made out before the CIT(A) by the assessee that the assessee has not expended the expenditure during the year under consideration, and therefore, addition made in itself is opposed to the provision of Section 69C of the Act.

1.

5. On these facts, we straightway notice that Section 69C cannot be attracted for the expenditure which has been admittedly recorded in the books; secondly, the expenditure recorded in the books in the earlier year and carried forward as an opening balance in the current year cannot be subject matter of Section 69C of the Act qua the assessment year in question. Therefore, where the basis for making addition itself is under cloud, there is no warrant to impose onerous under Section 271(1)(c) alleging any furnishing of inaccurate particulars of income. We thus find prima facie merit in the case of the assessee for absolving it from the rigours of penalty.

5.

In the result, the appeal of the assessee is allowed ex-parte.

Order pronounced in the open Court on 08/06/2022.

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