KAMAL PAHUJA,NEW DELHI vs. ITO, WARD- 51(2), NEW DELHI

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ITA 5937/DEL/2017Status: DisposedITAT Delhi04 February 2020AY 2013-143 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the penalty was not maintainable as the assessee was not a habitual defaulter and the surrender was made solely to buy peace, not indicating concealment or furnishing of inaccurate particulars. Therefore, the penalty was quashed.

What were the facts?

The assessee claimed commission expenses of Rs. 15,00,000/-. During assessment, the assessee surrendered Rs. 6,00,000/- out of these expenses to buy peace, without contesting the quantum. Subsequently, a penalty was imposed under Section 271(1)(c).

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when income is surrendered to buy peace and not due to concealment or furnishing inaccurate particulars, especially when the assessee is not a habitual defaulter.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DLEHI

Before: SMT. DIVA SINGH

For Respondent: Ms. Rinku Singh, Sr. DR
Hearing: 04.02.2020Pronounced: 04.02.2020

The present appeal has been filed by the assessee, wherein correctness of the order dated 17.07.2017 of CIT(A)-17, New Delhi pertaining to 2013-14 assessment year is assailed on the ground that penalty of Rs.1,80,000/- imposed u/s. 271(1)(c) of the Income-tax Act was bad in law, as stated in ground No. 1. The remaining grounds are arguments in support of ground No. 1.

2.

At the time of hearing, an adjournment application was moved on behalf of the assessee. However, in view of the material available on record, the adjournment request was rejected and the parties were directed to argue the appeal on merits.

3.

The ld. AR, relying on the submissions advanced before the Assessing Officer and CIT(A) in the respective orders, submitted that the penalty imposed is liable to be quashed. The ld. Sr. DR, on the other hand, relying on the impugned orders, submitted that the assessee had failed to substantiate its claim and thus, the penalty imposed is maintainable under law and may be sustained. The ld. AR was required to address whether the assessee is a habitual defaulter. It was stated in response thereto that it was the first time that the assessee was visited with penalty and it was his submission that the surrender was made only to buy peace and it is not a case of concealment of income or furnishing of inaccurate particulars of income.

4.

Relevant facts of the case are that the assessee is shown to be an individual engaged in the business of trading in clothes under the name and style of M/s. Hitesh Textiles. In the year under consideration, the assessee declared income of Rs. 19,72,904/-. The subject matter of contention is the surrender of Rs.6,00,000/- out of commission expenses of Rs.15,00,000/- claimed to have been paid to Smt. Savita Arora Rs. 4,00,000/- and Neeti Arora Rs.2,00,000/-. The assessee in terms of surrender did not contest the issue further in the quantum proceedings under the stated plea of abiding by the stand that the surrender was for buying peace. The said claim was not considered by the tax authorities. Considering the peculiar facts and circumstances of the present case in the light of the facts on record that the assessee is not a habitual defaulter, the penalty in the peculiar facts and circumstances, I am of the view, warrants that it should be quashed. Accordingly, the penalty is directed to be quashed.

5.

In the result, the appeal is allowed.

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