GURAKA PRAKASH REDDY,CHENNAI vs. DCIT, CHENNAI

This is an appeal filed by the Assessee against the order of the learned Commissioner of Income Tax (Appeals)-5, Chennai in 5/15-16 dated 17.10.2016 for the Assessment Year 2012-2013.

There is a delay of sixty-five days in this appeal. The Assessee has filed a delay condonation petition, wherein he has stated that the order under appeal was handed over to the Chartered Accountant, M/s. Venkatagiri & Co. and unfortunately the said appellate order was misplaced while not bringing

The learned Departmental Representative had strongly opposed the condonation of delay.

We have heard both the sides, perused the affidavit filed by the Assessee. From the Affidavit, we find that the Counsel of the Assessee who appeared before the learned Commissioner of Income Tax (Appeals) had handed over the appellate order to M/s. Venkatagiri & Co. who is supposed to file the appeal before the Tribunal. On repeated requests made by the Counsel for the Assessee, the senior partner of M/s. Venkatagiri & Co. has said that the appellate order copy was misplaced but thereafter the same is traced out and the appeal filed immediately. From the above, we find that the delay of filing the appeal in these circumstances was beyond the control of the Assessee. In our opinion, there is a sufficient cause to condone the delay, accordingly the delay is condoned.

In so far as the merits of the case is concerned, the facts in brief is that the Assessee is in the business of trading in leather and had filed his return of income by declaring a total income of Rs.17,47,220/-. In the Assessment

During the course of the penalty proceedings, the Assessing Officer has asked the Assessee that you have not deducted TDS in respect of the payment made to Kotak Mahindra Prime amounting to Rs.40,514 and in respect of the travelling expenses of your wife which is not for the business purpose amounting to Rs.1,99,302/- and in respect of the business promotion expenses amounting to Rs.4,00,864/- has been incurred out of which 25% amounting to Rs.1,00,216 is not for the business purpose. Therefore, the same is disallowed and thereby you have concealed the income. In response, the Assessee has submitted before the Assessing Officer as under:

After considering the explanations of the Assessee, the Assessing Officer is of the opinion that the Assessee had concealed the income and had imposed penalty u/s.271(1)(c) of the Income Tax Act, 1961.

On appeal, the learned Commissioner of Income Tax (Appeals) confirmed the order of the Assessing Officer.

On being aggrieved, the Assessee had carried the matter in the appeal before this Tribunal.

The learned Counsel for the Assessee had submitted that the addition made by the Assessing Officer were based on the books of accounts, bills and invoices and that neither the Assessee had concealed the income nor had filed inaccurate particulars.

The learned Departmental Representative strongly supported the order passed by the lower authorities.

We have heard both the sides and perused the materials available on record and gone through the orders of the authorities below.

In this case, the penalty levied by the Assessing Officer is on three counts. In the case of the Assessing Officer is that the Assessee had paid interest of Rs.40,514/- to M/s. Kotak Mahindra Prime and no TDS was deducted. Therefore, the same is to be disallowed and added back to the Assessee and the addition was made. The second addition that was made by the Assessing Officer is that the Assessee has incurred a travel and financial expense of Rs.5,81,628/- out of which travelling expenses of the Assessee’s wife was amounting to Rs.1,35,l788/- to Singapore and Rs.37,348/- to Pune and Rs.26,166/- to Hyderabad, totaling to an amount of Rs.1,99,302/- that are not business expenditure. He added the same to the income of the Assessee. The third addition made by the Assessing Officer is that the Assessee has debited Rs.4,00,864/- towards business promotion expenses. The expenditure contain elements of personal use and unverifiable in nature. Therefore, 25% of the business promotion is disallowed and added back to the income of the 6 -: Assessee. Accordingly, the penalty levied in response to the notice issued by the Assessing Officer, the Assessee had submitted detailed explanations coupled in detail before the Assessing Officer. The interest paid to Kotak Mahindra Prime amounting to Rs.40,514 and cash loan taken from the financial institutions and therefore no TDS is to be deducted. Travel and financial expenses amounting to Rs.1,99,302/- was related to the business. The business promotion expenses amounting is Rs.1,00,216/- is disallowed as the expenditure was personal in nature. All the additions made by the Assessing Officer are made on assumptions and that it would not lead to concealment of income nor filing of inaccurate particulars. The Assessing Officer after considering the same had levied penalty and was confirmed by the learned Commissioner of Income Tax (Appeals).

We find that the above three additions made by the Assessing Officer in this case, the Assessee has filed all the details before the Assessing Officer such as the books of accounts, bills and vouchers. Based on the books of accounts and the bills and vouchers, the Assessing Officer has noticed that the Assessee has incurred such an expenditure and had come to a conclusion that some of the expenditure is personal in nature and that some of the expenditure was not relating to the business and therefore he was of the opinion that there is concealment of income and hence levied penalty u/s.271(1)(c) of the Income Tax Act, 1961. We have gone through the Assessment Order and also through the order of the learned Commissioner of Income Tax (Appeals) and after

In the result, the appeal of the Assessee is allowed.