CIT vs. DWARKA TELELINKS PVT LTD

IN THE HIGH COURT OF DELHI AT NEW DELHI . 26.10.2010 . Present: Mr. N.P.Sahni, Advocate for the Appellant. Mr. O.P.Sapra, Advocate for the Respondent. . + ITA No.1651/2010. . Penalty proceedings were initiated by the Assessing Officer and the penalty was imposed under Section 271(1) (c) of the Income Tax Act on the ground that following additions were made in the assessment carried out by the AO which is as under:- . 1. Loan from Sh. Mayuresh P Dave : Rs.5,21,362/- 2. Loan from Smt. Rajni Ben: Rs.4,46,134/- 3. Excess pay Channel exp. Claimed Rs.4,64,000/- ______________ Rs.14,31,496/- _____________ . No doubt these additions made under section 62 of the Act are sustained by the Higher Authorities. However, the penalty imposed has been deleted by the Income Tax Appellate Tribunal on the ground that the act of the assessee was bona fide. It is stated in the following backdrop:- ? As regards penalty on account of disallowance of expenses, once again the fact remains that the disallowance is made because as per the new arrangement, the assessee was not required to icur the expenses. However, still the fact remains that the assessee has made the payment on account of payment to the channel companies. Though the assessee agreed for disallowance of such expenses., on account of the fact that assessee was not under obligation to pay such expenses, the claim was withdrawn but when the claim was made, it was under bona fide belief. Having made the payment, assessee can be said to be entertaining bona fide for claiming such expenses. Therefore, it cannot be said that assessee has furnished inaccurate particulars of income. All relevant particulars were filed. It is settled law that merely because additions are sustained in assessment proceedings, though the same are relevant in penalty proceedings, the same are not conclusive. The assessee has explained the credit in the name of Sh. Dave and Smt. Rajni Ben. If there are two persons failed to file evidence for their source of payment., it cannot be said that the assessee has not discharged its onus. Thereafter, the addition could have been made in the hands of the persons providing credit but so far as assessee is concerned, the source of credit is proved which is also substantiated by filing evidence of their incurring the expenditure. Accordingly, we cancel the penalty levied.? . We are of the view that no substantial question of law arises. Dismissed. . . . A.K. SIKRI, J. . SURESH KAIT, J. OCTOBER 26, 2010 hk . . . . #15 .