DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-6, JAIPUR vs. M/S SPYTECH BUILDCON, JAIPUR

PER SHRI BHAGCHAND ,AM.

This appeal filed by the Revenue is directed against the order of Ld. CIT (A)- 2, Jaipur, dated 29.08.2017 pertaining to the Assessment Year 2010-11. The Revenue has raised the following grounds of appeal:-

“(i) Whether on the facts and in the circumstances of the case and in law, the CIT(A) has erred in deleting the penalty of Rs. 13,30,801/- imposed by AO ignoring the fact that the order of the ITAT on the quantum issue has been challenged by the department before the Hon’ble High Court. (ii) the appellant craves its rights to add, amend or alter any of the grounds on or before the hearing.”

submitted that Hon’ble ITAT while deciding the quantum of appeal of the assessee

2 ITA No. 809/JP/2017. M/s Spytech Buildcon, Jaipur.

has deleted the addition and the Ld. CIT(A) has granted relief by relying upon the

decision of the Hon’ble ITAT, Jaipur Bench in assessee’s quantum appeal.

Therefore, there is no merit in the appeal of the Revenue.

2.1 On the other hand, Ld. D/R has submitted that, the Department has preferred

the appeal against the quantum order of the ITAT before the Hon’ble Rajasthan High

court.

2.2 I have heard both the sides. The Ld. CIT(A) has deleted the penalty by

holding as under:-

“The authorized representative of the assessee filed a copy of the order of the Hon'ble ITAT, Jaipur Bench in the assessee's own case of for Assessment Year 2010-11 against the order under section 143(3). Vide this appeal order dated 14.09.2016 (ITA No.149/JP/2015 and 205/JP/2015), the Hon'ble ITAT has deleted the addition stating therein:

"19. For the above, we do not find any merit in the objection sought to be raised by the department to the effect that since the assessee was following the mercantile system of accounting, the ld. CIT(A) was not justified in deleting the addition to the extent of Rs. 4,68,43,199/- 20. The action of the ld. CIT(A) in having sustained the disallowance to the extent of Rs. 43,06,801/- has grievance the assessee and the assessee has raised ground No. 1 of its appeal before us. 25. It remains undisputed that the provision was made by the assessee for certain expected expenditure. As such, the provision was made due to the arising of the possibility of the expenditure in future. This was what had promoted the estimation. Now, if the provision does not stand exhausted even four years from the end of the year in which it was made, this does not mean that the provision to that extent was ill conceived. The details of the expenditure intended were duly made available. That such incurrence of expenditure did not come about,

3 ITA No. 809/JP/2017. M/s Spytech Buildcon, Jaipur.

cannot put to naught the provision which was made bonafide. The legal position remains that the amount unutilized would be available for being offered to tax n the next assessment year. The basis of the provision made has not been observed by the ld. CIT(A) to be irrational. In this regard, the decision of the Hon'ble Supreme Court in the case of `Bharat Earth Movers Vs CH", (2000) 245 TTR 428 (SC), which was followed by the Hon'ble Delhi High Court in the case of ‘Yum Restaurants (I)(P) Ltd ' (2015) 371 ITR 139 (Del), under similar circumstances, is directly attracted " 26. Therefore, we are of the considered opinion that the ld CIT(A) has gone wrong in sustaining the addition to the extent of Rs. 43,06,801/-. The same should also have been deleted. We order so now. Therefore, the addition of Rs. 5,11,50,000/- is deleted in toto."

Following the above judgment of Hon'ble ITAT, Jaipur, since the quantum additions have been deleted, the penalty imposed thereon cannot be sustained. The appeal of the assessee is allowed.”

Since, the relief has been granted by the Ld. CIT(A) on the basis of the deletion of

quantum of addition by Hon’ble ITAT. Therefore, the Bench find no merit in the

appeal of the revenue same is hereby dismissed.

Order is pronounced in the open court on 07/12/2017.

Sd/- ( HkkxpUn ½ ( BHAGCHAND) ys[kk lnL;@Accountant Member

Jaipur Dated:- 07/12/2017.

4 ITA No. 809/JP/2017. M/s Spytech Buildcon, Jaipur.

Pooja/ आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Deputy Commissioner of Income Tax, Circle-6, Jaipur. 2. The Respondent – M/s Spytech Buildcon, Jaipur. 3. The CIT(A). 4. The CIT, 5. The DR, ITAT, Jaipur 6. Guard File (ITA No.809/JP/2017) vkns'kkuqlkj@ By order,

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