THE PR. COMMISSIONER OF INCOME TAX-4 vs. M/S GOVIND NAGAR SUGAR LTD.

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ITA/654/2016HC DelhiDLHC01185058201626 October 2016Bench: HON'BLE MR. JUSTICE S. RAVINDRA BHAT,HON'BLE MS. JUSTICE DEEPA SHARMA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the findings of the Income Tax Appellate Tribunal, which upheld the deletion of penalties by the CIT(A), were pure questions of fact. The Tribunal found that the assessee had furnished details of creditors, that prior period expenses were included by mistake, and that the AO's disallowance of other expenses was based on unverifiable vouchers without conducting further inquiry. The Court concluded that no substantial question of law arose from these factual findings. Therefore, the appeal filed by the Revenue was dismissed. The operative direction was the dismissal of the appeal, affirming the deletion of penalties.

What were the facts?

The Revenue is aggrieved by an order of the Income Tax Appellate Tribunal (ITAT) which upheld the deletion of penalties imposed by the Assessing Officer (AO) for Assessment Year 2009-10. The assessee had made three claims: Rs. 42,53,602/- towards creditors, Rs. 12,72,146/- for prior period expenses, and Rs. 13,13,224/- for other expenses. These claims were disallowed and attained finality. Subsequently, the AO initiated penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961, and imposed penalties on all three counts. The Commissioner of Income Tax (Appeals) deleted these penalties. The CIT(A) found that the assessee had provided details of creditors, that prior period expenses were included mistakenly, and that the AO's conclusion regarding unverifiable vouchers for other expenses lacked further inquiry. The ITAT affirmed these findings.

What were the issues?

1. Whether the deletion of penalty under Section 271(1)(c) for disallowance of liability towards creditors to the extent of Rs. 42,53,602/- is a question of law or fact, considering the assessee furnished details of creditors. 2. Whether the deletion of penalty under Section 271(1)(c) for disallowance of prior period expenses of Rs. 12,72,146/- is a question of law or fact, given it was held to be an inclusion by mistake. 3. Whether the deletion of penalty under Section 271(1)(c) for disallowance of other expenses of Rs. 13,13,224/- is a question of law or fact, where the AO's conclusion on unverifiable vouchers was made without further inquiry. Assessee's Contention: The judgment does not record specific contentions made by the assessee before the High Court. However, the findings of the CIT(A) which were upheld suggest that the assessee had provided necessary details and that the disallowances were either due to mistake or insufficient inquiry by the AO. Revenue's Contention: The Revenue argued that the penalties were rightly imposed by the AO, and the deletion by the CIT(A) and ITAT was erroneous. The judgment does not explicitly detail the revenue's arguments beyond their aggrieved status.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

$~1 * IN THE HIGH COURT OF DELHI AT NEW DELHI +

ITA 654/2016

THE PR. COMMISSIONER OF INCOME TAX-4 ..... Appellant Through: Mr. Puneet Rai and Mr. Ruchir Bhatia, Advocates.

versus

M/S GOVIND NAGAR SUGAR LTD.

..... Respondent

Through: None.

CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MS. JUSTICE DEEPA SHARMA

O R D E R %

26.10.2016

The revenue is aggrieved by the order of the Income Tax Appellate Tribunal which upheld the deletion of penalty originally imposed by the Assessing Officer on three heads. The assessee had for assessment year 2009-10 made three claims – (i) liability towards creditors to the extent of Rs.42,53,602/- (ii) prior period expenses of Rs.12,72,146/- and (iii) other expenses under various heads of Rs.13,13,224/-. These were disallowed and attained finality. Concurrently, the AO issued notice under Section 271 (1) (c) of the Income Tax Act and imposed penalty on all the three counts. The CIT (A), however, deleted these on a consideration of the materials on record. For the first ground, the CIT (A) was of the opinion that the assessee had furnished the details of creditors; for the second it

was held that prior period expenses were included by mistake and that with respect to the third head, the AO appears to have concluded in the original assessment that the vouchers issued in support were unverifiable and self generated, without making any further enquiry. These findings recorded by the CIT (A) were affirmed. We find no question of law in any of these findings which are pure question of fact.

No substantial question of law arises. The appeal is, therefore, dismissed.

S. RAVINDRA BHAT, J

DEEPA SHARMA, J OCTOBER 26, 2016 /vikas/

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