NEW LIFE MARKETING & TRADING P. LTD,MUMBAI vs. ITO 4(3)(1), MUMBAI

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ITA 1681/MUM/2019Status: DisposedITAT Mumbai22 September 2020AY 2004-052 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 rejection of a claim by the assessee does not automatically lead to the levy of penalty under section 271(1)(c). The penalty was deleted, citing the Supreme Court decision in Reliance Petro Products Pvt. Ltd.

What were the facts?

The assessee, engaged in investment and commission agency, faced a disallowance for expenses on account of purchase during assessment. A penalty under section 271(1)(c) was levied on the disallowance, which was confirmed by the CIT(A) despite a reduction in the addition.

What were the issues?

Whether penalty under section 271(1)(c) is leviable solely on the basis of disallowance of expenses, and if the reduction of addition by CIT(A) impacts the penalty.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “SMC” Bench, Mumbai

For Respondent: Shri Pramod Nikalje
Hearing: 21.09.2020Pronounced: 22.09.2020

This is an appeal by the assessee wherein the assessee is aggrieved that learned CIT(A) has erred in sustaining the penalty levied under section 271(1)(c) of the I.T. Act amounting to Rs.63,896/- by order dated 5.2.2019.

2.

Brief facts of the case are that assessee in this case is engaged in the business of investment in shares and commission agent. During the course of assessment proceedings the Assessing Officer made disallowance of Rs. 22,435/- for expenses on account of purchase. Addition was restricted to Rs. 1,77,242/- by learned CIT(A). Penalty under section 271(1)(c) of the Act amounting to Rs. 63,896/- was also levied.

3.

Upon assessee’s appeal learned CIT(A) confirmed the penalty despite noting that in assessee’s other group concern case, the entire addition was deleted.

4.

Against this order the Revenue is in appeal before the ITAT. I have heard learned Departmental Representative and perused the record. I find that the 2 New Life Marketing & Trading Pvt. Ltd.

addition on account of bogus purchase has been done by the Assessing Officer. Penalty has been levied on the entire amount of disallowance despite noting that learned CIT(A) has reduced the disallowance. Moreover, rejection of a claim by the assessee cannot ipso facto lead to the conclusion that penalty u/s. 271(1)(c) of the Act is leviable. This proposition draw support from Hon'ble Supreme Court decision in the case of Reliance Petro Products Pvt. Ltd., (322 ITR 158). Hence, I set aside the order of the authorities below and delete the penalty.

5.

In the result, assessee’s appeal is allowed.

Order pronounced under Rule 34(4) of the ITAT rules on 22.9.2020.

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