SHREENATH MOTORS P.LTD,MUMBAI vs. DCIT 5(3), MUMBAI

PDF · subscribers
ITA 4379/MUM/2018Status: DisposedITAT Mumbai01 March 2021AY 2005-063 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 mere rejection of a claim does not automatically warrant a penalty under Section 271(1)(c), especially when all aspects were disclosed and the claim was not ex facie bogus. The assessee's conduct was not found to be contumacious.

What were the facts?

The assessee's appeals were against penalties levied under Section 271(1)(c) following disallowances of director's remuneration and travelling expenses. The disallowances were related to expenses for a director's education and travel of the director's wife.

What were the issues?

Whether penalty under Section 271(1)(c) can be levied solely on the basis of disallowance of claims without evidence of concealment or furnishing inaccurate particulars. Whether the assessee's conduct warranted the levy of penalty.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, “G” Bench, Mumbai

For Appellant: Shri S.C. Tiwari
For Respondent: Shri T.S. Khalsa
Hearing: 23.02.2021Pronounced: 01.03.2021

Heard together (2 matters)

I.T.A. No. 4379/Mum/2018
I.T.A. No. 4380/Mum/2018

Read from the judgment's own cause title. This page is filed under one of them.

O R D E R Per Shamim Yahya (AM) :-

These are appeals by the assessee against common order of learned Commissioner of Income Tax (Appeals) [in short learned CIT(A)] dated 23.4.2018 were in following penalties levied under section 271 (1) c have been confirmed.

Assessment year Amount 2005-06 2,13,928/- 2006-07 1,91,250/-

2.

Brief facts of the case leading to the levy of penalty at that in one of the assessment years there was disallowance of directors remuneration and payment to the management Institute for the directors education expenses. This disallowance was of the ground that the said director was young and son of the one of the other directors of the company. In another year the disallowance was on account of travelling expenses of the director with respect to the portion of travelling expenses attributed to the travel of the wife of the director. This was done by the AO on the ground that assessee could not 2 M/s. Shreenath Motors Pvt. Ltd.

establish that there was any evidence that the director was required to take the wife into some social meetings during travelling.

3.

These disallowances were confirmed up to the level of ITAT. Penalty on the disallowances were levied and confirmed by the learned CIT(A).

4.

Against this order assessee is in appeal before us.

5.

We have heard both the parties and perused the records. We find that penalty in this case has been levied on disallowance of directors remuneration and travelling expenses. From the facts narrated above we find that assessee has duly made the claim. All aspects are disclosed. There is no furnishing of inaccurate particulars or concealment of income. Honourable Supreme Court in the case of Reliance Petro Products Pvt. Ltd., (322 ITR 158)(SC) has held that mere rejection of the claim of the assessee cannot ipso facto lead to the conclusion that the assessee should be visited with the regours of penalty under section 271(1)(c) of the Act. In our considered opinion this proposition is duly applicable on the facts of the present case. It cannot be said that assessee's claim was ex facie bogus. Hence rejection of the said claim cannot warrant levy of penalty under section 271(1)(c) of the Act.

6.

Furthermore we find that a larger bench of honourable Supreme Court in the case of Hindustan Steel Vs. State of Orissa (83 ITR 26) has expounded that the authority may not levy penalty if the conduct of the assessee is not found to be contumacious. In the present case we are of the considered opinion that assessee’s conduct is not contumacious to warrant levy of penalty. Accordingly in the background of aforesaid discussion and precedents, we set aside the orders of authorities below and delete the penalty.

3 M/s. Shreenath Motors Pvt. Ltd.

7.

In the result, appeals by the assessee stand allowed.

Pronounced in the open court on 1.3.2021.

More judgments on Section 271(1)(c)

All 25,141 judgments and leading authorities on Section 271(1)(c) →

Recent GST High Court judgments

Search GST case law →