VIDS OVERSEAS,MUMBAI vs. ITO WD 25(1)(4), MUMBAI

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ITA 1811/MUM/2017Status: DisposedITAT Mumbai05 September 2018AY 2012-133 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 mere ad-hoc disallowances of expenses do not automatically attract penalty under Section 271(1)(c) unless furnishing of inaccurate particulars or concealment of income is proven. The Tribunal relied on the Supreme Court's decision in CIT vs. Reliance Petroproducts Pvt. Ltd.

What were the facts?

The assessee's appeal pertains to the assessment year 2012-13, challenging a penalty imposed under Section 271(1)(c). The penalty was levied consequent to ad-hoc additions made to the assessee's income for personal elements in expenses and a disallowance under Section 14A.

What were the issues?

Whether penalty under Section 271(1)(c) can be levied solely on the basis of ad-hoc disallowances without proving concealment or furnishing of inaccurate particulars.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 14A,Section 143(3)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “F” BENCH, MUMBAI

Before: SHRI SAKTIJIT DEY, JM & SHRI MANOJ KUMAR AGGARWAL, AM

Per Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year [AY] 2012-13 contest the order of the Ld. Commissioner of Income-Tax (Appeals)-37 [CIT(A)], Mumbai, Appeal No.CIT(A)-37/IT-560/ITO-25(1)(4)/15-16 dated 02/01/2017 qua confirmation of penalty u/s 271(1)(c) for Rs.44,859/- as levied by Ld. AO vide penalty order dated 24/09/2015. The assessment ITA.No.1811/Mum/2017 Vids Overseas Assessment Year-2012-13 for impugned AY was framed by Ld. Income Tax Officer-25(1)(4), Mumbai [AO] u/s 143(3) of the Income Tax Act, 1961 wherein the assessee has been saddled with quantum additions of Rs.1,44,720/- which is adhoc addition to account for personal element in various expenses as claimed by the assessee during impugned AY. Another disallowance of Rs.563/- has been made u/s 14A. These additions have attained finality since the assessee has not contested the same any further. Against these additions, the assessee has been saddled with impugned penalty of Rs.44,859/- which, upon confirmation by Ld. first appellate authority, is under appeal before us.

2.

The Ld. Authorized Representative [AR] for assessee, Shri. Gaurav Kabra contested the penalty which has been controverted by Ld. Departmental Representative [DR], Ms. Pooja Swaroop.

3.

We have carefully heard the rival contentions and perused relevant material on record. Upon due consideration, we find that the assessee has suffered adhoc disallowances against various expenses as claimed by him. Nevertheless, there is no furnishing of inaccurate particulars or concealment of income which warrant imposition of penalty u/s 271(1)(c). Mere adhoc disallowance of expenses, in our opinion, do not attract the penalty unless it is shown that any of the condition viz. furnishing of inaccurate particulars or concealment of income as envisaged by Section 271(1)(c) is fulfilled. The ratio and principles laid down in Hon’ble Supreme Court rendered in CIT Vs. Reliance Petroproducts Pvt. Ltd. [2010 322 ITR 158] squarely applies to the facts of the case and therefore, we delete the impugned penalty 4. Resultantly, the assessee’s appeal stands allowed.

1.

ITA.No.1811/Mum/2017 Vids Overseas Assessment Year-2012-13 Order pronounced in the open court on 05th September, 2018.

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