RADIANT SATELLITE (INDIA) PRIVATE LTD.,KOTA vs. INCOME TAX OFFICER, WARD-1-1, KOTA

Rival contentions have been heard and record perused. Facts in brief are that the assessee is engaged in providing cable operator services. During the course of scrutiny assessment, the A.O. made

2 ITA 1426/JP/2018 M/s Radiant Settllite (P) P Ltd. Vs ITO various disallowances out of expenses claimed by the assessee. The assessee accepted the disallowances of expenses made under the head festival expenses, travelling expenses, printing and stationary expenses and telecasting expenses etc. Thereafter the A.O. also levied penalty U/s 271(1)(c) of the Act with respect to ad hoc disallowance so made by him. The A.O. also imposed penalty with regard to disallowance of employees contribution which was not paid within the due time stipulated under the employees provident fund scheme, accordingly, the same was also disallowed U/s 36(1)(va) of the Act. The penalty so levied was confirmed by the ld. CIT(A), against the assessee is in further appeal before the ITAT.

At the outset, the ld AR of the assessee has pointed out defect in the notice issued U/s 271(1)(c) r.w.s. 274 of the Act for initiating penalty proceedings and contended that it is not clear from the notice as to for which default, this notice was issued. Accordingly, in view of various judicial pronouncements, penalty levied by the A.O. is not sustainable. With regard to merit of the addition, the ld AR has contended that there was part disallowance of expenses claimed by the assessee, therefore, in view of decision of the Hon’ble Supreme Court in the case of CIT Vs

On the other hand, the ld DR has relied on the orders of the authorities below.

I have considered the rival contentions and carefully gone through the orders of the authorities below and found from the record that the penalty has been levied by the A.O. merely on account of ad hoc disallowance of expenses so made. The Hon’ble Supreme Court in the case of CIT Vs Reliance Petroproducts (P) Ltd. (supra) have clearly held that mere disallowance of part of expenditure will not amount to concealment of particulars of income so as to visit the assessee from penal provisions. Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false, there is no question of inviting the penalty U/s 271(1)(c) of the Act. A mere making of claim which is not sustainable in law by itself will not amount to furnishing inaccurate particulars regarding income of the assessee. Applying the proposition of law as laid down by the Hon’ble Supreme Court to the facts of the instant case, I observe that the penalty has been levied merely for ad hoc disallowance of part of 4 ITA 1426/JP/2018 M/s Radiant Settllite (P) P Ltd. Vs ITO expenses. Accordingly, it is not a fit case for levy of penalty U/s 271(1)(c) of the Act, therefore, I direct the A.O. to delete the same.

In the result, appeal of the assessee is allowed.