RISHABH BIRLA,NEW DELHI vs. ACIT, NEW DELHI

Rishabh Birla vs. ACIT Legal Heirs of Lt. Sh. Anurag Birla, Circle 24(1) C-37, Basement, Hauz Khaz, New Delhi. New Delhi. AADPB3556B (Appellant) (Respondent) Assessee by : Sh. Sandeep Sapra, Adv. Department by : Sh. Sridhar Dora, Sr. DR Date of Hearing : 13/11/2018 Date of Pronouncement: 16/11/2018 ORDER PER BEENA A PILLAI, JUDICIAL MEMBER Present penalty appeal has been filed by assessee against order dated 12/06/15 passed by Ld. CIT (A)-13, New Delhi for assessment year 2008-09 on following grounds of appeal: 1. “That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not deleting the penalty amounting to Rs. 3,53,079/- fully as imposed by Ld. AO u/s 271(1)(c) on account of interest expenses and electricity & water expense being disallowed u/s 36(1)(iii) & u/s 37(1) of the Income Tax Act, 1961 during the assessment proceedings u/s 143(3), the impugned penalty has been imposed without appreciating the facts and circumstances of the case and by recording incorrect facts and findings.

2. That having regards to the facts and circumstances of the case Ld. CIT(A) has erred in law and on facts by confirming the penalty initiated by Ld. AO on account of Rishabh Birla disallowance of interest expense amounting to Rs. 6,79,610/-. 3. That having regard to the facts and circumstances of the case Ld. CIT(A) has erred in law and on facts by confirming the penalty initiated by Ld.AO on account of disallowance of electricity & water expense amounting to Rs. 3,54,303/-. 4. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.”

2. Brief facts of the case are as under: Assessee would file its return of income on 29/09/08 declaring total income of Rs.93,75,630/-. The return was processed u/s 143(1) of the Act and case was selected for scrutiny. Thereafter, notice u/s 142(1) is along with questionnaire and notice u/s 143(2) was issued to assessee. In response to statutory notices, representative of assessee filed requisite details as called for.

3. Ld.AO observed that assessee is engaged in business of cargo handling and travel agency under name of M/s AIR Shagoon. Assessment was completed at an assessed income of Rs.1,82,36,100/-. In assessment order, Ld. AO made addition on account of interest expenses, electricity and water charges.

3.1 Ld.AO was of opinion that, interest paid on property loan deserves to be added as assessee failed to put it to use for business purposes. For this default penalty under section 271(1)(c) of the Act was initiated.

3.2 As regards disallowance of electricity and water charges amounting to Rs.3,64,409/- is concerned, Ld.AO disallowed the same, as assessee had not offered any explanation.

Rishabh Birla 3.3 Thereafter, appeal was filed by assessee against assessment order passed before Ld. CIT (A) who reduced addition in respect of interest expenses and restricted disallowance is at Rs.6,79,610/-. In respect of electricity and water charges, disallowance was restricted to Rs.3,54,303/-. Accordingly, Ld. AO initiated penalty proceedings vide notice dated 30/01/13 for concealment. Various submissions were advanced by assessee, however, not satisfied with replies, Ld. AO levied 100% penalty of tax sought to be evaded for concealing of particulars of income.