RASEX TRADERS PRIVATE LIMITED,MUMBAI vs. ACIT 5(3)(1), MUMBAI

This appeal in A.Y.2014-15 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-10, Mumbai in appeal No.CIT(A)-10, Mumbai/10021/2017-18 dated 21/12/2018 (ld. CIT(A) in short) in the matter of imposition of penalty u/s.271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as Act).

The only issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in confirming the levy of penalty u/s.271(1)(c) of the Act in the sum of Rs.68,289/- in the facts and circumstances of the instant case.

None appeared on behalf of the assessee. We have heard the ld. DR and perused the materials available on record. We find that assessee is a company engaged in the business as commission agent of agricultural products and had filed its return of income for the A.Y.2014-15 on 30/11/2014 declaring total income of Rs.91,45,440/-. The assessment was completed u/s.143(3) of the Act determining total income of Rs.92,55,440/- making disallowance of donation of Rs.1,11,000/- after granting deduction u/s 80G of the Act in the assessment. We find that assessee had given donation to genuine trusts and Prime Minister’s National Relief Fund etc., and had by oversight not disallowed the same in the computation of income while filing the return. It is a fact that assessee also did not claim deduction under 80G of the Act in the return. But the fact of incurrence of expenditure towards donation has been explicitly disclosed in the profit and loss account of the assessee. This donation of Rs.2,21,000/- was disallowed by the ld. AO in the assessment and deduction u/s.80G was granted to the tune of Rs.1,10,000/- and disallowance to the tune of Rs.1,11,000/- was made in the assessment. For this disallowance, the ld. AO levied penalty u/s.271(1)(c) of the Act for furnishing inaccurate particulars of income. We find that the fact of incurrence of donation had been duly disclosed separately in the profit and loss account of the assessee, which alone enabled the ld. AO to make disallowance in the assessment. It is not in dispute that the profit and loss account was filed along with the return of income. Hence, there was no other external information which the ld. AO had received enabling him to make this disallowance. Hence, it tantamounts only to legitimate error committed by the assessee, which when pointed out, was rightly withdrawn by the assessee in the course of assessment proceedings. The genuineness of incurrence of such expenditure is not doubted by the Revenue. It is not in dispute that the assessee had also duly produced donation receipts before the ld. AO. Hence, we find that assessee’s case squarely falls within the ratio decidendi laid down by the Hon’ble Apex Court in the case of Price Water House Coopers vs. CIT reported in 348 ITR 306 and Reliance Petro Chemicals Ltd., reported in 322 ITR 158. Respectively following the said decision, we have no hesitation in directing the ld. AO to delete the penalty levied in the sum of Rs.68,289/- in the facts and circumstances of the instant case. Accordingly, the ground raised by the assessee is allowed.

In the result, appeal of the assessee is allowed.