M/S KUKRA CHAIN & JEWELLERY PVT. LTD.,NEW DELHI vs. DCIT, NEW DELHI

This is an appeal by the assessee against the order dated 09.01.2015 of the ld. CIT(A)-30, New Delhi.

The grievance of the assessee in this appeal relates to the sustenance of penalty levied by the AO u/s 221 of the Income Tax Act, 1961 (hereinafter referred to as the Act).

During the course of hearing, the ld. Counsel for the assessee at the very outset stated that the addition on the basis of which the impugned penalty was levied has been deleted by the ITAT Delhi Bench ‘SMC’, New Delhi in for the assessment year 2006-07 (copy of the said order was furnished which is placed on record).

We have considered the submissions of both the parties and perused the material available on the record. In the present case, it is noticed that the ld. CIT(A) sustained the penalty levied by the AO for the reasons that the assessee’s quantum appeal was dismissed by him vide order dated 31.12.2014 which was a subject matter of the assessee’s appeal in for the assessment year 2006-07 before the ITAT “SMC” Bench, New Delhi wherein vide order dated 02.01.2018, the additions were deleted. The relevant findings have been given in para 4 of the said order dated 02.01.2018 which read as under: “4. I have heard the submissions and perused the material available on record. On a consideration of the entire factual matrix as set out in the orders of the authorities below and considering the submissions of the parties before the Bench, I find that in the peculiar facts and circumstances of the present case, addition on facts was not warranted. It is noted that in the facts of the present case, books of accounts have not been rejected. The explanation of the assessee consistently on record is that a new person was handling sales at the retail counter who made mistakes coupled by the fact that there was some mistakes in the scale used. These arguments consistency on record are not improbable arguments. It is seen that the total amount as mentioned in the bills has not been varied by the Revenue. In the absence of rejection and books of accounts of the assessee in the peculiar facts and considering the explanation qua the penciled figures and scoring of the figures in ink in their respective bills which have been attached at Paper Book page 01- 29. The explanation that the mistake is on account of recording wrong rate as weight had been addressed deserves to be accepted. Once, the purchases and sales have been accepted and the opening and the closing stock stands accepted in the circumstances as per settled legal position thereon accepting the explanation of the assessee, the addition has to be deleted. Accordingly, the addition is directed to be deleted.”

After the aforesaid deletion, there was no outstanding demand and no default within the meaning of provision of Section 221(1) of the Act. As such no penalty 3 Kukra Chain & Jewellery Pvt. Ltd. was leviable. Accordingly, the penalty of Rs.1,50,000/- levied by the AO and sustained by the ld. CIT(A) is deleted.

In the result, the appeal of the assessee is allowed. (Order Pronounced in the Court on 11/07/2018)