NAGESH KNITWEARS PVT. LTD.,NEW DELHI vs. ADDL. CIT, SPECIAL RANGE- 6, NEW DELHI

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ITA 5279/DEL/2019Status: DisposedITAT Delhi21 February 2020AY 2012-133 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the entire addition made on account of rebate and discount was deleted, the penalty levied under Section 271(1)(c) was not sustainable and therefore liable to be quashed.

What were the facts?

The assessee claimed a deduction for rebate and discount. The Assessing Officer added back a significant portion of this claim due to lack of substantiation. The CIT(A) deleted a part of the addition but confirmed another part.

What were the issues?

The primary issue was the validity of the penalty levied under Section 271(1)(c) when the underlying addition was subsequently deleted.

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 BENCHES ‘Friday/A’, NEW DELHI

Before: Ms. Sushma ChowlaDr. B. R. R. Kumar

Hearing: 07.02.2020Pronounced: 21.02.2020

Per Dr. B.R.R. Kumar, Accountant Member:

1.

The present appeal has been filed by the assessee against the order of ld. CIT(A)-37, New Delhi dated 16.04.2019.

2.

Following grounds have been raised by the assessee:

1. That the ld. CIT (A) has erred both in law and on facts in confirming the order of penalty levied u/s 271(1)(c) of I.T. Act, 1961 at Rs.1,43,690/- by the ld. Additional Commissioner of Income Tax.

2. That the appellant humbly prays that the order of the ld. CIT (A) may kindly be set aside and penalty imposed by the ld. Addition CIT be cancelled.”

3.

Heard the arguments of both the parties and perused the material on record.

4.

The brief facts of the case are that the assessee filed the return of income of Rs.1,20,90,150/-. As per order u/s 143(3)

Nagesh Knitwears Pvt. Ltd. of the Act dated 26.03.2015, the income was assessed at Rs.1,69,63,941/-. The assessee debited an amount of Rs.48,73,791/- on account of rebate and discount. The assessee was required to furnish the complete details in respect of the said rebate and discount, the assessee filed ledger account of Rs.4,78,611/- in respect of rebate and discount only and another ledger was in respect of the claim paid to foreign parties at Rs.44,08,788/- and since the assessee failed to substantiate the claim except filing the ledger account which is not enough proof, the Assessing Officer added the total sum of Rs.48,73,791/- under the head ‘rebate and discount’.

5.

The ld. CIT (A) after perusal of the bank certificates to export and realization from which the difference between bill amount and realized amount directed the deletion of Rs.44,08,758/-. In respect of Rs.4,65,003/- relating to domestic sale, the ld. CIT (A) observed that though the assessee was asked to produce the books of accounts, they failed to produce the same and therefore, confirmed the disallowance to the tune of Rs.4,65,003/-. The Tribunal after verification of domestic sale held that the rebate and discount constituting 0.14%, 0.02%, 0.02% and 0.24% declared by the assessee in the earlier four years has been accepted, unaltered in the orders passed u/s 143(3)of the Income Tax Act, 1961 and deleted the addition of Rs.4,65,003/-.

6.

At this juncture, since the entire addition made on account of rebate and discount stands deleted, the penalty levied u/s 271(1)(c) do not survive. Hence, the order of the ld. CIT (A) is liable to be quashed.

Nagesh Knitwears Pvt. Ltd. 7. In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 21/02/2020.

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