DCIT, NEW DELHI vs. M/S. NKG INFRASTRUCTURE LTD., NEW DELHI

This is an appeal by the department against the order dated 19.02.2014 of the ld. CIT(A)-III, New Delhi.

The only grievance of the department in this appeal relates to the deletion of penalty of Rs.15,85,014/- levied by the AO u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as the Act).

Facts of the case in brief are that the assessee filed the return of income on 17.10.2011 u/s 153A of the Act, declaring an income of Rs.10,71,61,325/-. However, the assessment was completed on 30.12.2011 after making addition on two counts. First addition of Rs.46,99,031/- was made on the disallowance of expenses u/s 40(a)(ia) of the Act due to non-deduction of TDS on certain payments. The 2 NKG Infrastructure Ltd. second addition of Rs.47,08,899/- was made after adding 0.25% of the turnover for the reasons that certain payments were found to be improperly vouched during the examination of books and some of the payments were made in cash. The AO levied the penalty on the addition of Rs.47,08,899/-.

Being aggrieved the assessee carried the matter to the ld. CIT(A) who followed his earlier order dated 18.02.2014 for the assessment year 2004-05 and deleted the penalty by observing that there was nothing on record to substantiate that there had been concealment and/or furnishing of inaccurate particulars of income or there were incorrect facts or prima facie bogus claim had been made by the assessee.

Now the department is in appeal. During the course of hearing, the ld. Counsel for the assessee submitted that a similar issue has been decided by this bench of the ITAT for the assessment years 2008-09 to 2010-11 in to 2732/Del/2013 vide order dated 16.11.2017 wherein the appeal of the department was dismissed. It was also pointed out that in those years also the addition was made by making the estimated disallowance @ 0.25% of the turnover as in the year under consideration (copy of the said order was furnished which is placed on record).

In her rival submissions, the ld. CIT DR supported the order of the AO and submitted that the res judicata is not applicable in the income tax proceedings. However, could not controvert the aforesaid contention of the ld. Counsel for the assessee.

After considering the submissions of both the parties and the material on record, it is noticed that an identical issue has already been adjudicated in assessee’s own case for the assessment years 2008-09 to 2010-11 in to 2732/Del/2014 wherein the relevant findings have been given in para 13 of the order dated 16.11.2017 which read as under: “13. We are of the considered view that AO made the addition merely on the ground that the surrender was not to his satisfaction rather proceeded to estimate the disallowance @ 0.25%. When the assessee company has produced account books before the AO during assessment proceedings, AO was required to compute the income on the basis of documentary evidence and not on the basis of estimation. But the AO proceeded to guesswork the additional income on the basis of some defects in the account books and on the ground that the income offered is not adequate. In the given circumstances, we are of the considered view that there is no question of furnishing of inaccurate particulars to attract the provisions contained u/s 271(1)(c) of the Act.”

So, respectfully following the aforesaid referred to order, we do not see any valid ground to interfere with the findings given by the ld. CIT(A) and do not see any merit in this appeal of the department.

In the result, the appeal of the department is dismissed. (Order Pronounced in the Court on 12/06/2018)